Market regulator the Securities and Exchange Board of India (Sebi) today imposed a penalty of Rs 5 lakh on promoter and Managing Director of Pyramid Saimira Theatre (PSTL), PS Saminathan, for his failure to comply with directions issued by it.
The Sebi had in an order in December last year directed Saminathan 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 and acquire the shares within three months from the date of the order.
"...The Noticee [P S Saminathan] has not complied with the said direction issued by Sebi. Moreover, it is an admitted fact that the Noticee failed to comply the direction issued by Sebi vide order dated December 23, 2010," the Sebi said.
The regulator said Saminathan has violated provisions related to Section 15 HB of Sebi Act which deals with failure to comply with orders issued by it.
"Considering all the facts and circumstances of the case... Impose a penalty of Rs 5 lakh only on the Noticee viz. PS Saminathan," Sebi said, while directing him to deposit the penalty within 45 days.
PSTL was allegely involved in committing irregularities in its books of account and showing inflated profits and revenues in the financial statements in 2007-08.
PSTL and its directors allegedly lured the general public to invest in the shares of the company based on such false financial statements.
The regulator had earlier in 2009 banned Saminathan from "buying, selling or dealing in securities" on account of his involvement in the incidents of 2007-08.
Saminathan had, in reply to show-cause notice from Sebi, cited this ban for failure to make an open offer to buy the shares.
"...Though he has been banned from dealing in securities market, he is specifically permitted/directed to make public offer to acquire the shares of PSTL from public share holders. The direction to make the public offer overrides the ban to the extent necessary for compliance with the same and therefore, the directions are not contradictory but both were to be complied with.
"The noticee has not submitted any evidence to prove to the least that he attempted to comply with the direction either seeking any clarification or direction from Sebi to mitigate the difficulties if any, he had in complying with the direction," Sebi said, while rejecting the argument.
