SEBI issues order against Pyramid Saimira promoters

The market regulator Securities and Exchange Board of India (SEBI) today issued an order directing P S Saminathan, one of the promoters and managing director of Pyramid Saimira Theatre (PSTL) and Nirmal N Kotecha, one of the promoters of the company “not to buy, sell or deal in the securities market including IPOs, in any manner, either directly or indirectly”. The regulator’s order came after it conducted investigations in the matter of PSTL relating to the forged SEBI letter and possible manipulation in the scrip in December 2008.
 
SEBI also asked the Financial Intelligence Unit (FIU) – India and Reserve Bank of India to verify company’s accounts, and for necessary preventive and punitive action and to Income Tax Department for further necessary actions as the Income Tax Department deems fit.
 
It may be recalled in December last year the Chennai-based entertainment company Pyramid Saimira said it was targeted of a serious fraud wherein the company was sent a forged letter of SEBI 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 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 has been issued by SEBI to Saminathan on December 19, 2008 and started its investigation.
 
When contacted Saminathan was not available for comment.
 
In a statement today SEBI said it conducted investigations in the matter of PSTL relating to the forged SEBI letter and possible manipulation in the scrip. Investigations, conducted so far, prima facie reveal that the forgery was done to manipulate the stock price of PSTL and Nirmal N Kotecha, one of the promoters and the largest shareholder of PSTL, was one of the major beneficiaries of the said manipulation and appeared to have largely masterminded the forgery.
 
He was also found to be using large number of front accounts including his related persons/entities to manipulate the securities market and to route the funds through several layers in order to hide the source and flow of funds, and this prima facie appears to be a money laundering activity.
 
Several persons and entities have been prima facie found to have aided/abetted Kotecha in his aforementioned activities.
 
The regulator directed Kotecha, Rakesh Sharma, Rajesh Unnikrishnan and V K Pratheesh Kumar not to buy, sell or deal in the securities market including IPOs, in any manner, either directly or indirectly, till further directions.
 
“These persons/entities prima facie have been found to have played a key role in the forgery, dissemination of the information contained in the forged SEBI letter to the media and misleading the media to believe the authenticity of the information that was circulated to them, said SEBI."