sebi:WTM/AB/IVD/ID2/7989/2020-21

SEBI · SEBI · 2009-04-23 · Ananta Barua, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Noticees 1, 2, 3, 4, 5, 8 and 9 found to have contravened Section 12A(a), (b) and (c) of the SEBI Act, 1992 and Regulation 3(a), 3(b), 3(c), 3(d), 4(1), 4(2)(a), 4(2)(b) and 4(2)(e) of PFUTP Regulations, 2003; Noticee 2 directed to disgorge Rs. 20,75,858.50 with 12% interest; Noticees 1, 4, 5, 8 and 9 restrained from accessing securities market for 2 years; proceedings against Noticees 6 and 7 disposed of.

Provisions invoked

• s. 11
• s. 19
• s. 12A
• s. 24

Regulations

• Reg. 11
• Reg. 3
• Reg. 200
• Reg. 3(a)

Holding

The Noticees (except 6 and 7) were found to have contravened Section 12A(a), (b) and (c) of the SEBI Act, 1992 and Regulation 3 and 4 of the PFUTP Regulations, 2003 by engaging in synchronized and reversal trades in the scrip of PSTL in collusion with Nirmal Kotecha. Noticee 2 was directed to disgorge Rs. 20,75,858.50 with interest, and Noticees 1, 4, 5, 8 and 9 were restrained from accessing the securities market for 2 years.

Full text

Final Order in the matter of Pyramid Saimira Theatre Limited Page 2 of 85 Limited (hereinafter referred to as “PSTL”/ “the company”), to make an open offer under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as “SAST Regulations”) for an additional 20% stake at a price not less than Rs. 250/- within 14 days, for allegedly violating creeping acquisition norms. With the reports in the media appearing about the impending offer at Rs. 250/-, the price of the shares of the company increased on December 22, 2008, when the stock markets opened for the day. On December 22, 2008, PSTL first informed the BSE Limited (hereinafter referred to as “BSE”) and National Stock Exchange of India Limited (hereinafter referred to as “NSE”) in the morning that the company had not received any communication from SEBI regarding the media reports on Open Offer. BSE disseminated the denial by the company at 10:28:04 a.m. on December 22, 2008 on its website and NSE did so at 10:30:00 a.m. on same day.

Final Order in the matter of Pyramid Saimira Theatre Limited Page 3 of 85 19, 2008 and sold these shares on December 22, 2008 i.e. after the price rise in the shares on December 22, 2008 consequent to the publication of news about the forged SEBI letter. It was also found that some persons/ entities had sold PSTL shares on December 22, 2008 and bought back the shares at lower prices on the same day taking advantage of both the price rise which occurred due to the publication of the forged SEBI letter as well as the price fall which occurred due to a clarification on media reports on Open Offer provided by P.S. Saminathan to the stock exchanges that the company had not received any communication directing P. S. Saminathan to make open offer.

Final Order in the matter of Pyramid Saimira Theatre Limited Page 4 of 85 several entities that were involved in the manipulation in the scrip of PSTL and associated with Nirmal Kotecha. Accordingly, show cause notices were issued to 44 entities, including to the 9 Noticees herein vide Show Cause Notice dated January 16, 2014 (hereinafter referred to as “SCN”). I note that the SCN was issued to 20 entities. 11 out of the 20 entities in the SCN, known as the Shah Group, filed Appeal No. 132 of 2017 before the Hon’ble Securities Appellate Tribunal, Mumbai (hereinafter referred to as “Hon’ble SAT”) against the confirmatory order dated December 14, 2009 whereby SEBI had confirmed the

Source: SecMarx — sebi:WTM/AB/IVD/ID2/7989/2020-21. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.