Sebi bans Pyramid Saimira promoter for 10 years

The Securities and Exchange Board of India (Sebi) on Thursday barred P S Saminathan, the promoter of Pyramid Saimira Theatre Ltd (PSTL), from the market for 10 years.

The regulator also barred Uma Saminathan, his wife, for five years and asked Saminathan to make a public offer through a merchant banker to acquire PSTL shares from public shareholders.

The company was accused of allotting shares to non-employees under the employee category in its initial public offer (IPO).

“It may be noted that Sebi, in its order in November 2009, had directed PSTL inter alia to restrain from dealing in securities in any manner whatsoever or accessing the securities market directly or indirectly for seven years. Further, the appeals filed against this order have been dismissed by the Securities Appellate Tribunal and the Supreme Court,” Sebi whole-time member M S Sahoo said in Thursday’s order.

“I also note that the official liquidator has been appointed as a provisional liquidator in the winding-up petition filed in the matter of PSTL. In view of this, no useful purpose would be served by issuing any direction under this proceeding against PSTL, which would have otherwise been issued.”

Sebi also barred Saminathan from being a director in any listed company for 10 years from the date of the order.

It said the price to be paid in the public offer would be determined by the valuer in the manner prescribed in Regulation 23 of the Sebi (Delisting of Equity Shares) Regulations, 2009. Saminathan has been asked to acquire the shares tendered in response to the offer within three months from the date of the order.

Sebi asked the Bombay Stock Exchange to facilitate the valuation and delist PSTL if the public shareholding falls below the minimum level after the purchase.

In November last year, Sebi had banned PSTL for seven years from the market after finding that the company indulged in a fraud in allotment of 4,22,200 shares reserved for employees in its IPO in December 2006 and allotted 98.5 per cent shares under the category to seven people who were not its employees. These people donned the cloak of ‘employee’ on the eve of the issue for four to six months, got the shares and sold soon after the company listed, making an unlawful gain of Rs 2.31 crore, according to the earlier Sebi order.

The IPO was subscribed 15.5 times in the retail category, 28.09 times in the high networth individual category, 17.18 times in the qualified institutional buyer category and only 0.015 times in the employee category (excluding the applications made by the seven people).

Without the fraud, the unsubscribed portion in the employee category would have gone to other categories of investors.