Order against Shri Nirmal Kotecha, Shri P.S. Saminathan and others in the matter of M/s. Pyramid Saimira Theatre Ltd.

 

There were several media reports on December 21 and 22, 2008 that Securities and Exchange Board of India (hereinafter referred to as SEBI) had ordered Shri P.S. Saminathan, one of the promoters of M/s. Pyramid Saimira Theatre Limited (herein after referred as PSTL), to make an open offer under the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (herein after referred to as SEBI (SAST) Regulations, 1997) for an additional 20% stake, at a price not less than Rs 250/- within 14 days, for allegedly violating creeping acquisition norms. SEBI had clarified on December 23, 2008 that no such order or letter has been issued by SEBI to Shri P.S. Saminathan on December 19, 2008. SEBI conducted investigations in the matter of PSTL relating to the forged SEBI letter and possible manipulation in the scrip. Investigations, conducted so far, prima facie reveal that the forgery was done to manipulate the stock price of PSTL and Shri Nirmal N. Kotecha, one of the promoters and the largest shareholder of PSTL, was one of the major beneficiaries of the said manipulation and appeared to have largely masterminded the forgery. Shri Nirmal N. Kotecha was also found to be using large number of front accounts including his related persons/ entities to manipulate the securities market and to route the funds through several layers in order to hide the source and flow of funds, and this prima facie appears to be a money laundering activity. These acts of Shri Nirmal N. Kotecha are detrimental to the interest of genuine investors in the securities market and pose a threat to the efficient functioning of securities market. Several persons and entities have been prima facie found to have aided / abetted Shri Nirmal Kotecha in his aforementioned activities.

 

In view of the above, Dr. K.M. Abraham, Whole Time Member, SEBI has passed an ad-interim, ex-parte order dated April 23, 2009 pending investigation and passing of final order:

 

1.      Directing Shri Nirmal N. Kotecha, Shri Rakesh Sharma, Shri Rajesh Unnikrishnan and Shri Pratheesh Kumar V.K. not to buy, sell or deal in the securities market including IPOs, in any manner, either directly or indirectly, till further directions. These persons / entities prima facie have been found to have played a key role in the forgery, dissemination of the information contained in the forged SEBI letter to the media and misleading the media to believe the authenticity of the information that was circulated to them.

 

2.      Directing Shri Manilal Kotecha, Ms. Veena Kotecha, Ms. Viral Doshi, M/s. Kotecha Capital Services Pvt. Ltd., M/s. Nirman Mgt. Services Pvt. Ltd., M/s. Nishwet Mgt. Services Pvt. Ltd., Shri Deepak Thakkar, Shri Amol A Kokane, Shri Darshan Desai, Shri Rajesh Vamanrai Jani, Shri Raju Ghanshyamdas Shah, Shri Shailesh Jayantilal Shah, Shri Rajesh Jayantilal Shah, Ms. Binaben Shaileshkumar Shah, Shri Nirmal Rohitbhai Shah, Ms. Ritaben  Rohitkumar  Shah, Ms. Manishaben Rajeshkumar Shah, Shri Nitin Gorodia and Shri Nimesh H. Chitalia to not to buy, sell or deal in the securities market including IPOs, in any manner, either directly or indirectly, till further directions. These persons / entities related to / associated with Shri Nirmal Kotecha are prima facie found to have played a key role in facilitating Shri Nirmal Kotecha in carrying out suspicious banking transactions, carrying out and disguising his manipulative intent and gaining advantage from the forgery or otherwise.

 

3.      Directing Shri P.S. Saminathan not to buy, sell or deal in the securities market including IPOs, in any manner, either directly or indirectly, till further directions. Shri P.S. Saminathan has prima facie made misleading public announcements, only to create public interest in the scrip of PSTL for facilitating Shri Nirmal Kotecha in off-loading the shares of PSTL at artificially inflated price in the market.

 

4.      Prohibiting M/s. Keynote Capital Ltd., a SEBI registered stock broker, from giving any trade recommendation in respect of companies listed in any of the recognized stock exchanges till further directions. The broker has issued unfounded and questionable trade recommendation about the shares of PSTL, which has had the effect of misleading the investors.      

 

5.      Prohibiting the stock brokers M/s. India Capital Markets Pvt. Ltd. and M/s. Dynamic Stock Broking (India) Pvt. Ltd. from entering into any fresh agreements with new clients in their operations as stock broker till further orders. Inspection of the aforesaid brokers is also ordered to be carried out by the Market Intermediaries Regulation and Supervision Department (MIRSD) of SEBI.

 

6.      Directing 230 persons / entities and their proprietors / partners / directors, (names provided in the order) who, prima facie appear to have carried out suspicious banking transactions and appear to have channeled these funds either directly or indirectly in the stock market to not buy, sell or deal in the securities market including IPOs, in any manner, either directly or indirectly, till further directions.

 

As the matter prima facie, appears to be concerning money laundering activities detrimental to the genuine investors at large, a copy of the Order is also being sent to the Financial Intelligence Unit (FIU) – India and to the Reserve Bank of India for further verification of these accounts, and for necessary preventive and punitive action, in accordance with law against the concerned entitles/persons as may be necessary, in the matter. A copy of the order is also being sent to the Income Tax Department for their information and further necessary actions as the Income Tax Department deems fit. 

 

The order comes into force with immediate effect.

The full text of the order is available on the website: www.sebi.gov.in

 

 

Mumbai

April 23, 2009