Sebi mulls legal action against Pyramid promoters

Market regulator Securities and Exchange Board of India (Sebi) is understood to be contemplating legal action against P S Saminathan, managing director and one of the promoters of Pyramid Saimira Theatre (PSTL), and Nirmal N Kotecha, another promoter of the company. This is in connection with a forged Sebi letter and possible manipulation of the company's stock in December 2008.

Some lawyers from the legal cell (criminal side) of the market regulator met a few well-known criminal lawyers yesterday to seek their opinion, a source close to the development said.

"Sebi can take criminal action against errant promoters, who violate the guidelines, and can bring them to book even under existing laws. This is why the lawyers from the legal cell of the regulatory body sought legal opinion. There could be some action soon," said the source.

Sebi had on April 24 issued an order, directing Saminathan and Kotecha "not to buy, sell or deal in the securities market, including IPOs, in any manner, either directly or indirectly". The regulator had also asked the Financial Intelligence Unit (FIU) and the Reserve Bank of India (RBI) to verify the company’s accounts for necessary preventive and punitive action. Even the Income Tax Department was also asked to take necessary action as it deemed fit.

In December 2008, the Chennai-based entertainment company had claimed that it had received a Sebi letter, asking Saminathan to make an open offer to minority shareholders. The company announced that Sebi had asked Saminathan to make an open offer to acquire 20 per cent of the shareholding at a price of Rs 250 per share, more than four times the ruling market price.

On December 23, 2008, Sebi had clarified that no such order or letter had been issued by it to Saminathan on December 19, 2008 and initiated an investigation into the matter.