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The Securities and Exchange Board of India did not accept J.Sagar Partner, Somasekhar Sundaresan’s argument on behalf of Pyramid Saimira Theater. It now faces a 7 year ban from dealing in securities or accessing the securities market, directly or indirectly. Earlier, masterminds Nirmal Kotecha and P.S. Saminathan too were banned from accessing the securities market.
Securities and Exchange Board of India (SEBI) has banned Pyramid Saimira Theater (PST) is from dealing in securities or accessing the securities market, directly or indirectly, for a period of 7 years for irregularities in the 2006 IPO.
PST’s IPO in 2006 was oversubscribed 15.5 times in the retail category, 28.09 times in the high-net-worth category, and 17.18 times in the institutional segment. Surprisingly, only 0.015 percent of the shares allocated were subscribed to by its employees. SEBI found that PST had allotted 98.5 percent of shares reserved under the employee category to seven persons who were not on the rolls of the company.
Partner Somasekhar Sundaresan assisted by associate Ravichandra S. Hegde of J. Sagar Associates argued on behalf of PST that it had relaxed company policy permitting flexible working hours and enabled payment of salaries in cash respect of the seven persons. The member went on to conclude that PSTL had colluded with the seven persons and used fraudulent methods to corner the shares under the employee quota. SEBI was represented by its Legal officers Sudha Rani and Kshama Wagherkar.
Whole time member of the SEBI, M.S Sahoo, ordered the ban on PST. P.S. Saminathan, Managing Director, Pyramid Saimira Theatre, speaking to the media described the order as “ridiculous” and said the company would appeal to the Securities Appellate Tribunal and “every other forum available to us”.
Pyramid has been at the centre of several stock market scams. In April this year SEBI had banned Nirmal Kotecha and P.S Saminathan from accessing the stock market. The SEBI order follows an investigation which revelaed a fake SEBI order in December 2008 and its impact on the share price of PST shares that benefited Kotecha, who sold the stock in December 2008. Senior Counsel Janak Dwarkadas argued the matter on behalf of Kotecha before the SEBI.