Sebi bans Pyramid Saimira MD for 10 yrs

Taking a tough stand against manipulation of account books,the Securities and Exchange Board of India (Sebi) has banned Pyramid Saimira Theatre Limited (PSTL) managing director PS Saminathan from the capital market for ten years and directed him to buy back shares from investors and delist the company. The Sebi action follows a probe that found severe irregularities in its accounts. In a scathing order against the promoters of the company,Sebi said,“Saminathan has been directed to make a public offer through a merchant banker to acquire shares of PSTL from public shareholders by paying them the value determined by the valuer in the manner prescribed in Regulation 23 of the SEBI (Delisting of Equity Shares) Regulations,2009 and acquire the shares offered in response to the public offer,within three months from the date of this order.” The promoter stake in PSTL is around 19.99% while public and others hold 76.19% stake.” The BSE has been directed to facilitate valuation of shares to be purchased as mentioned above,and compulsorily delist PSTL,if the public shareholding reduces below the minimum level in view of aforesaid purchase,” Sebi said. The regulator also banned his wife Uma Saminathan from the capital market for five years. Saminathan can’t become a director in any listed company for a period of 10 years,it said. The Sebi order stated that PSTL inflated its profits and revenues by fictitious entries in its accounts,disclosed the same in quarterly and annual results for the financial year 2007-08 and thereby misled the public in their investment decisions. “It also made false corporate announcements regarding agreements with theatres and allotted convertible warrants to PS Saminathan on preferential basis without consideration towards the issue of warrants,” Sebi said. The Sebi order,signed by whole-time member MS Sahoo,also said that “Saminathan,being MD,promoter and member of the audit committee of PSTL,was responsible for all the acts of omission and commission of PSTL and Mrs Saminathan,in concert with Saminathan,managed to receive 14,85,000 PSTL shares on conversion of illegally allotted warrants”. In July 2010,the Supreme Court had upheld Sebi’s order restraining Pyramid Saimira from accessing the securities market for seven years for alleged irregularities in issuing of shares during its initial public offer (IPO). The court refused to entertain the company’s plea that Sebi had already penalised its guilty directors,and the ban should be lifted as it will hurt its 40,000 shareholders. On November 10,2009,Sebi had passed the order after a probe found that Saimira Theatre,which ostensibly issued 4,22,220 shares under its IPO to employees,had actually allotted these shares to seven ghost staff. During the inquiry,Sebi found that the seven employees who were allotted the shares were not employed at the company’s Bangalore branch and the register did not have their name. Moreover,the shares were sold immediately after the allotment. Sebi had imposed a seven-year ban on the firm.