Somatostatin is normally secreted by D cells in the pancreatic islets and GI mucosa. It basically blocks everything GI-related ("encourages somato-stasis"): decreased gastric acid & pepsinogen secretion, decreased pancreatic and small intestine fluid secretion, decreased gallbladder contraction, decreased insulin & glucagon release.

Decreasing gastrin release blocks the increase of GI motility (increased GI motility is the inherent problem of diarrhea).

The drug in the question is probably octreotide.

Also noteworthy: Somatostatin analogs, such as octreotide, inhibit the release of VIP and counteract its effects.

Used to treat VIPoma: VIP is released by parasympathetic ganglia and leads to the increased secretion of water and electrolytes by the intestines as we as the increased relaxation of smooth muscle fibers in the gastrointestinal tract. Excess production results in profound fluid and electrolyte secretion into the gastrointestinal tract, severe watery diarrhea, electrolyte disturbances, achlorhydria, alkalosis, flushing, and vasodilation.