Market regulator Sebi today banned 5 persons, who are allegedly involved in the Pyramid Samira case, from buying and selling shares in capital markets for 3 years after the watchdog found they had cornered employee quota shares of the company by pretending to be on its roles.
Five persons, who allegedly acted in collusion with the Pyramid Samira Theater (PSTL), have also been asked to surrender the money they made by obtaining employee quota shares along with an interest of 20 per cent.
These persons, Sebi order further said, would be banned for seven more years from buying and selling shares if they fail to surrender the "unlawful gains" made by acquiring shares during the initial public offer (IPO) of PSTL which hit the market in December 2006.
The five persons, who have been banned by Sebi from trading in the equity market in the Pyramid Saimira case are Kishore S Jain, Jayantilal R Jain, Sripal J Shah, Rajesh Prakash Jain and Praveen Kumar Devi Chand Jain.
Investigations by Sebi revealed that a total of seven persons had cornered more than 98 per cent of the shares in the "employee category" during the IPO, making an unlawful gain of about Rs 2.31 crore.
Of the seven, Sebi freed Sanjay Jhabak and Dheeraj Jain through a consent order after payment of a fee.
"The investigations also revealed that these seven persons, in collusion with PSTL, donned the cloak of 'employee' on the eve of public issue for 4 to 6 months with the sole purpose of receiving shares under the employee category," the order said.
While five of them left the company after making applications, two others did so immediately after the allotment of shares, the order added.
Under the Sebi order, the five banned people have to pay about Rs 1.23 crore and 20 per cent interest on the unlawful gain for the period from the date of sale of shares till disgorgement.
The accused, who cornered shares in the company had worked for four or five months and had only joined the company with the purpose to corner shares, the order said.
There were many things found during the investigation to prove that the persons had cornered the shares acting as employees of the company.
While the five of the them said that they received the salary in cash, the investigations proved that the salary was paid by cheques and that too with no serial numbers on the vouchers.
Besides, the five people also gave the address of the Pyramid office and guest Houser incorrectly.
Infact, Sebi in its order has also said that looking at the qualifications and experience of the five people and being high net worth individuals, it is surprising that all of them would seek job at a company for a small salary.
Sebi also said that the employment is a relationship between two parties and the accused can "don the cloak of an employee only if the employer co-operates with or there is an understating between the two".
Also, these people had a probation period of only 3 months despite the company rule that the probation would be for 6 months.
Further Sebi said, "If the company had abided by the normal probation period, the noticee would not have become eligible for applying for shares under the employee category."
