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Pyramid Saimira
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Introduction
The case is based upon the fraud act done by a company promoter to hike the
price of his company and take the advantage of share prices hike by selling his
stake on high prices as well as raising the company valuation based on share prices
in NSE. The company announced that SEBI had asked to make an open offer to
acquire 20% of shareholding at a price of more than four times the ruling market
price. The information was passed through media. The purpose was to
disseminating false information and manipulating the share price of the company.
Persons Involved
In the scam the company promoter, the SEBI person and the media person were
main accuse. P S Saminathan, the promoter of digital cinema chain Pyramid
Saimira, stock market operator Nirmal Kotecha in the Securities Exchange Board
of India (SEBI) & journalist Rajesh Unnikrishnan who works with India's leading
pink newspaper Economic Times were the main accuse. While some other persons
were also involved in the scam 16 individuals and 232 other entities were also
banned from participating in any form of share transactions for their involvement
in the scam, which caused huge fluctuations in Pyramid Saimira’s share price in
December2008 last year.
Act of Forgery
The company was sent a forged letter of SEBI asking Saminathan to make an open
offer to minority shareholders. The company, based on this forged letter,
announced that SEBI had asked Saminathan to make an open offer to acquire 20%
of shareholding at a price of Rs 250/share, more than four times the ruling market
price. The order pertained to a forged letter, purportedly from Sebi to Saminathan,
allegedly ordering him to make an open offer under the Sebi takeover regulations
for an additional 20 per cent stake, at a price not less than Rs 250 per share.
The market regulator on the very next day dec 23 had clarified that no order or
letter had been issued by it to Saminathn on Dec. and said letter was being
circulate with ulterior motive. The letter was sent to various media organizations
with the help of Sharma and Unnikrishnan. The matter came under investigation of
SEBI. The market regulator today came out with the order alleging Kotecha,
Saminathan and others prima facie guilty of the offence. This letter sent
on December 22, 2008 had resulted in a major jump in share prices and the group
had benefitted from this jump, according to SEBI. . Kotecha was a major seller in
the Pyramid Saimira scrip on December 22, 2008, the day the news broke. He sold
15,05,862 shares on market at an average price of Rs. 75.85 per share on that day.
It is seen that out of the same, he sold 6,69,611 shares on BSE and NSE at an
average rate of Rs. 80.92 per share on December 22, SEBI said in a statement.
Nirmal Kotecha, associates of PSTL holding 12.92 per cent stake, was identified as
the beneficiary of the forgery. Kotecha was also found to be using a large number
of front accounts including his related persons/ entities to manipulate the securities
market and to route the funds through several layers and this prima facie appears to
be a money laundering activity.
Five persons, who allegedly acted in collusion with the Pyramid Samira Theater
Limited (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.
Sebi has also prohibited Keynote Capital Ltd, a Sebi registered stock broker, from
giving recommendations in respect of companies listed in any of the recognized
stock exchanges till further orders. It also asked two brokers, India Capital Markets
Pvt Ltd and Dynamic Stock Broking (I) Pvt Ltd, from entering into fresh
agreements with new clients till further orders.
Conclusion
Throughout the case it is found that majored shareholder of the company planed o
take some unfair advantage of share movement. While the fake letter was send by
Mr. Kotecha and the announcement was made by the chairman of the company
that SEBI asked to make an open offer at 4 times high. When the stock price
jumped to double sold the stake to public at very high price and the cheated by
wrong information through announcement and media.