The Securities and Exchange Board of India (Sebi) barred Pyramid Saimira Theatre Promoter and Managing Director P S Saminathan, promoter Nirmal Kotecha and 228 people and entities from the securities market till further orders.
The regulator’s order came after it conducted investigations into a forged Sebi letter and possible manipulation of the scrip prices in December 2008.
Sebi also asked the Financial Intelligence Unit and the Reserve Bank of India to verify the company’s accounts for preventive and punitive action and to the income tax department for further action.
In December last year, the Chennai-based entertainment company said it was the target of serious fraud, as a result of which the company and several media houses were sent a forged letter from Sebi, asking Saminathan to make an open offer to minority shareholders to acquire 20 per cent in the company at Rs 250 per share, more than four times the ruling market price.
On December 23, 2008, Sebi clarified that no such order or letter had been issued to Saminathan on December 19, 2008, and started its investigation. Saminathan was not available for comment.
The regulator directed Kotecha and two others — Rakesh Sharma, former executive of Adfactors PR Pvt Ltd, and Rajesh Unnikrishnan, assistant editor with the The Economic Times — 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. They also derived illegal profits,” the order said.
Sebi today said prima facie investigations revealed that the forgery was done to manipulate the company's stock price and named Nirmal N Kotecha, one of the promoters and the largest shareholder at that time, as one of the major beneficiaries of the manipulation. Kotecha has largely masterminded the forgery and used one Pratheesh Kumar's name as the company secretary, the order said.
He was also found to be using a large number of front accounts, including related people and 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.
These acts are detrimental to the interests of genuine investors in the securities market and pose a threat to its efficient functioning, the regulator said, adding that several people and entities were, prima facie, found to have aided/abetted Kotecha in his activities.
On Saminathan, the order said he “has prima facie made misleading public announcements, only to create public interest in the company’s scrip for facilitating Kotecha in off-loading the shares of the company at an artificially inflated price in the market”.
Sebi also found that about 230 entities carried out suspicious banking transactions and channelled funds directly or indirectly to the stock market.
