Citizens' Issues
Public Interest Exclusive
Pyramid Saimira Case Rolls On

How SEBI went soft on market manipulators of the Pyramid Saimira shares, while its actions destroyed the company


On 26th November, the Securities & Exchange Board of India (SEBI) announced an e-auction of the property of the controversial PS Saminathan, promoter of Pyramid Saimira Theatres Limited (PSTL), a publicly listed company. SEBI said that Mr Saminathan and his wife Uma had failed to pay up a penalty of over Rs1 crore leading to their property being attached and auctioned to recover the penalty, under SEBI’s newly acquired powers.


The PSTL case goes back to 2008, when a market operator named Nirmal Kotecha, who is or was the co-promoter of PSTL, had used a forged SEBI letter planted in the media to make significant and undue profits. SEBI launched an exciting investigation, where, for the first time, it used call origination data from cell-phone operators to trace those involved.


Among the many facts that emerged later was that the forged letter was an inside job by a SEBI manager colluding with Mr Kotecha. Moneylife’s persistent effort, followed by a question in parliament by Rajeev Chandrasekhar, brought this fact into the public domain. No action has been taken against the manager, who, when last heard of, was merely suspended pending inquiry. A journalist from The Economic Times, Rajesh Unnikrishnan, who was close to Nirmal Kotecha and had helped plant the story in two newspapers, was named in the SEBI investigation. So were Viral Doshi, Nirmal Kotecha’s wife, and other members of his family whose bank accounts were used to route payments.


A couple of years ago, Mr Kotecha sought a meeting with me and came to Moneylife office. I had assumed that his purpose was to tell me his side of the story and claim that he was wrongly targeted. To my surprise, he wasn’t even particularly interested in discussing the investigation. Typically, having banned 200-odd entities through an interim order, SEBI’s investigations continued at a leisurely pace.


SEBI, finally, completed investigation against five key entities connected with Mr Kotecha only in January 2014; of these, four others, including two of Mr Kotecha’s companies, were released from the bar on trading; some others had been let off much earlier. SEBI also ‘initiated proceedings’ against Nirmal Kotecha; but it would probably be safe to say that he is unlikely to be punished or absolved anytime soon.


However, Mr Kotecha’s wife, Viral Doshi, decided to contest the indefinite bar on her capital market activities. She approached the securities appellate tribunal (SAT) asking it to direct SEBI to pass final orders in her case. In early March 2014, SAT asked SEBI to decide in 45 days; the regulator sprang into action less than a month later and lifted the ban on Viral Doshi. SEBI’s order said that, although she was guilty of aiding and abetting her husband’s fraudulent activities, her debarment for four years was punishment enough. This argument has been used to let off most of the Kotecha group companies.


Meanwhile, look at what happened to PS Saminathan and PSTL, which, at one time, employed thousands of persons and had operations in six countries. PSTL’s management has been accused of dubious accounting, false corporate announcements and allotment of warrants to the promoter Mr Saminathan, without payment.


Clearly, this was a fit case to force a change in management under the Companies Act rather than shut down a listed company, hurting the interests of investors and employees. Curiously, however, SEBI and the Supreme Court seemed to prefer a shutdown.


While holding no brief for anyone accused of market manipulation, the PSTL case seems bizarre, when you consider that the Anil Ambani group got away with paying Rs50 crore, no admission of guilt and a very opaque consent order, after being caught channelling over Rs1,000 crore into Indian stocks by routing it via Mauritius-based Pluri Emerging Companies Cell E.


In fact, the UK regulator imposed stiffer fines and penalties on those involved, including a fund manager called Sachin Karpe, than our regulator. But even that didn’t embarrass SEBI which maintained a stoic silence. The very same investigators who handled PSTL had also gone overseas to investigate the Anil Ambani group’s transactions. As an investor standing on the sidelines and watching the investigation and disciplinary processes of India’s market regulator, does it inspire confidence?



Vaibhav Dhoka

3 years ago

SEBIs registration is licence to do illegal things,as there is no fear of police action or otherwise.Yesterday another regulator RBI governor spoke of NPA,none of corp orates and bosses are ever prosecuted but to recover losses now they are increasing ATM charges,the result ordinary public has to bear the brunt.


3 years ago

Unless the laws are amended to make pay offs possible by the collective company, loyalty, and the resulting advantage, will lie with the individuals who make the pay offs. So it is that equity shareholders and investors in other such ponsi schemes (the Unit Trust of India leaps to mind)bear the losses in law less India.

Pulse beat

Olive Oil and Heart attacks

Afunny study, by the Universities of Glasgow and Lisbon and private firm Mosaiques Diagnostics (Germany) published in a good journal, of course, funded by the industry, has shown that bread dunked in olive oil can cut heart attacks within six months. In the first place, olive oil cannot act that fast to reduce heart attack rates. Benefit from coconut oil would have been greater!


Dr Bill Mullen, of the Institute of Cardiovascular and Medical Sciences, said: “If we are able to identify the early signatures of diseases before they have had a chance to take hold, we can start to treat them before they become a problem requiring costly medical intervention.” It is the first time this technique has been applied from a nutritional perspective to try to get to the bottom of which food or what ingredient is truly responsible for health benefits.


One Ebola Case in India

Thank God, they say that this patient has almost recovered but might still have viruses. He has been isolated. I am not sure how good the isolation is. We need to be more careful; there was some doubt that the virus can spread by air droplets. Doctors, nurses, and all other staff, including ambulance drivers, need protection. With our huge population, and our inadequate hygienic environment, the virus could wreak havoc. I hope our infectious diseases specialists have had adequate briefing, by now. Let them not forget that this virus need not be killed as long as we can maintain the internal environment of water and electrolytes intact. This is almost like cholera. The virus could quickly produce fatal dehydration. We have to tighten our entry points, like ports and airports, with better screening. Just asking a few questions will not help. At least, temperature should be checked as they did during the false alarm of the so-called swine ‘flu.


Alternative to Statin

For those obsessed in getting their cholesterol report right or are suffering one of the dangerous side-effects of statin, pharma companies are ready with another drug which they claim has no serious side-effects. A large study (funded by the industry) did show that this drug is as effective, if not more, as statin but has no serious side-effects. The compound ezetimibe is marketed as Vytorin or Zetia; 10mg has to be taken once daily.


The final judgement on this could only be passed after an independent study confirms the findings of the industry-funded research. A good feature of this drug is that it does not block the enzyme that produces many chemicals in the liver along with cholesterol. This drug decreases the absorption of cholesterol from the gut instead of blocking its production in the liver. So looks like a good choice, theoretically.


Microwave Devices Can Harm Human Health

The dirty electricity that emanates from devices like cell-phones, their towers, microwave ovens, and many other gadgets, could be dangerous. To quote Dr Barrie Trower, a former Royal Navy microwave weapons expert, “There are 8,300 military papers proving that microwave frequencies—which can be found emanating from wireless mobile devices—cause severe neurological and physiological damage. In fact, from 1953 to 1975, US embassy employees (and their children) in Moscow were exposed to low-level microwave radiation which caused an unusually high number of breast cancers, childhood leukaemia and many other forms of cancer.” This report has been kept under the wraps.


Dr Dietrich Klinghardt (MD, PhD, founder of Klinghardt Academy) has linked the ever-increasing exposure to electromagnetic radiation (EMR) to the rise in neurological illnesses like low-level depression, insomnia, chronic fatigue, numbness, tingling and ‘unexplainable’ muscle aches and pains.



Pushkala Ramani

3 years ago

The article will be an eyeopener for all those who use electronic gadgets for all and sundry things.

Indian market trends

The Sensex remained unchanged and the Nifty rose 1% during the fortnight ended 3rd December. ML Mid-cap Index rose 1%. ML Large-cap Index and ML Small-cap Index went up by 2% each. ML Mega-cap Index advanced 5%.



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