Sebi lets off Usha Saminathan in Pyramid Saimira warrants case

The Securities and Exchange Board of India (Sebi) has disposed of proceedings against Usha Saminathan, one of the promoters of Pyramid Saimira Theatre Ltd (PSTL). The regulator issued the order in a case relating to the allocation of warrants worth Rs 41.43 crore to Usha Saminathan.

Sebi was investigating the case after it was observed that PSTL at its board meeting held on October 22, 2007, allotted 3.64 million convertible warrants to P S Saminathan, the promoter director of the company on a preferential basis at Rs 310 per warrant.

The warrants were to expire on April 21, 2009. It was observed that on March 5, 2009, Saminathan transferred warrants in favour of Uma Saminathan another promoter of PSTL , who opted to convert 1.485 million warrants into equity shares and accordingly on April 11, 2009, following which PSTL allotted the shares on conversion of warrants at Rs 310 per share. For the exercise of the said warrants, the amount payable to the PSTL was Rs 41.43 crore.

Investigation observed that the amount towards conversion of the said warrants was received from various other third parties and much before the actual date when Usha Saminathan opted to convert the warrants.

It was alleged that she did not pay the above said amount to PSTL for the conversion of warrants and failed to pay the above consideration to PSTL for the conversion of warrants. Sebi had appointed Barnali Mukherjee as the adjudicating officer to investigate the case.

The officer in her order said that an amount of Rs 41.43 crore (90 percent of Rs 310 x 14,85,000) payable by Usha Saminathan, was received prior to the date of allotment.

And, the auditor of the company in a certificate dated April 9, 2009, confirmed that PSTL received on various dates ranging from February 1, 2008 to February 28, 2009 the balance amount of application money amounting to Rs 41.43 crore towards allotment of 1.485 million shares on conversion of equal number of share warrants.

“Considering the facts and circumstances of the case, I do not find the instant matter fit for imposition of penalty in terms of Section 15HB of the SEBI Act, 1992 and dispose of the proceedings accordingly,” the adjudicating officer said in her order.