Sebi levies Rs 42 lakh fine on 19 entities for fraudulent trading

Markets regulator Sebi has levied a total fine of Rs 42 lakh on 19 entities for their role in fraudulent trading in the scrip of Pyramid Saimira Theatre.

The penalty follows a probe conducted by Sebi to ascertain violation of Prohibition of Fraudulent and Unfair Trade Practices norms by certain entities while trading in shares of Pyramid Saimira during June-December 2008.

Sebi found that as per media reports published in December 2008, the regulator had directed one of the promoters of Pyramid Saimira Theatre, P S Saminathan, to make an open offer for an additional 20 per cent stake.

The next day Saminathan told exchanges that he had received the alleged letter from the regulator. But Sebi, through a press release, clarified that no such letter was issued by it.

Sebi also lodged an FIR with regard to forgery of Sebi letter. Later, investigations by Sebi revealed that forgery was done to manipulate the stock price of the firm, and that Nirmal Kotecha, one of the promoters and the then largest shareholder, was one of the major beneficiaries of the manipulation and appeared to have masterminded the forgery.

It was further observed that several entities directly and indirectly related to Kotecha had bought and sold the shares on exchanges.

Rakesh Sharma and Rajesh Unnikrishnan were part of the fraudulent scheme orchestrated by Kotecha in disseminating the forged letter to the media and misleading them in believing the authenticity of the said forged letter.

Besides, Dharmesh Shah had misled the media to believe the authenticity of the forged Sebi by posing as the company secretary of the firm. The individuals are facing a fine of Rs 2 lakh each.

As many as 15 entities that were among those involved in the manipulation in the scrip of the firm are facing fine in the range of Rs 1 lakh to Rs 4 lakh each. These include Inventure Growth & Securities, SPJ Stock Broker, DKG Securities, APL Infrastructure and Meet Shares and Stocks Services.

The scheme, plan, device and artifice exhibited in their trading pattern tantamount to fraud in the securities market in as much as it involves manipulative transactions in securities and misuse of the securities market, Sebi said in similarly worded orders.

Besides, an individual, Yatin Shah is also facing a fine of Rs 2 lakh for facilitating Kotecha into offloading huge stake in the Pyramid's scrip through fraudulent and manipulative trades.

The regulator has levied penalties through four separate orders issued on Monday.

In a separate order passed on Tuesday, Sebi imposed a fine of Rs 5 lakh each on Subhashree Hiris Pvt Ltd and Sky Light Distributors Pvt Ltd in a matter pertaining to diversion of Birla Pacific Medspa's initial public offer (IPO) proceeds.

Sebi noted that Rs 2 crore out of IPO proceeds was diverted to the two entities. The amount has neither been utilized for the stated object of IPO nor been returned to the company.

Instead of being utilized for the stated purpose, as disclosed in the prospectus, the money out of the IPO proceeds have been fraudulently diverted to the two entities who have aided and abetted Birla Pacific in diversion of these proceeds, Sebi concluded.