IPO scam: SEBI bars Pyramid Saimira for 7 years

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Market regulator Securities and Exchange Board of India (SEBI) has barred Pyramid Saimira from the securities market for seven years, reports CNBC-TV18's Priyal Guliani.

The regulator was investigating the company for irregularities in issuing of shares during its initial public offer (IPO) and ruled that seven persons "who donned cloaks as employees of the company had cornered the IPO shares". About 98.5% of Pyramid Saimira's shares were cornered, the SEBI order stated.

SEBI said it found evidence that the seven "employees" named Kishore Jain, Jayantilal Jain, Shripal Shah, Rajesh Jain, Pravin Jain, Dheeraj Jain were all based in Mumbai and that the possibility of them working for Pyramid Saimira looked difficult. SEBI also said it did not find any evidence of the employees' attendance.

The SEBI order says that, Pyramid Saimira, when investigated, said the employees were paid cash salaries, something the regulator says it did not find any evidence of. These employees had joined the company four months before the public issue.

SEBI has held the view that Pyramid Saimira aided and abetted the seven persons to corner shares of Pyramid Saimira under the employee category.

The ban is effective on an immediate basis. 

Reacting to the order, PS Saminathan, Managing Director of Pyramid Saimira, said the company would appeal against the SEBI order. Terming the SEBI investigation as completely one-sided, he said there was a limit to which SEBI could take arbitrary decisions. "I will not take a constructive notice. They should have the courtesy to communicate to me about the ban," he said.

Below is the verbatim transcript of his interview:

Q: What is your initial reaction, are you going to be appealing to this SEBI order?

A: Of course, we will be appealing to the SEBI order. The initial reaction is it is ridiculous. We feel SEBI does not have enough guts to prosecute the real culprits. They have not done a fair investigation; it is a completely unfair and one-sided investigation. They have accepted consent orders from criminals and culprits and they ban the victim. This is the way SEBI, supposedly a regulatory agency works.

In Para 10 of the order, they have clearly mentioned the investigation however has not established the sharing of the spoils between the seven persons and PSTL. When the investigation itself is clear that there is no share of PSTL and spoils by those seven persons, those seven persons who are criminals, they have accepted their consent, and they are banning the company with 40,000 shareholders. It is ridiculous to the extent.

Just because they have the regulatory power, do they have any arbitrary decisions they will make. There is a limit to which a company and a victim will be subjected to these kinds of nonsense. They cannot do an investigation on the forgery; they know who has done the forgery. I charge in open media, SEBI knows who has done the forgery and has no guts to come out and say who has done the forgery.

There are elements inside SEBI who are involved in this forgery and they have done all these things and they are blaming the company. There is a limit to which the industries of this country will be allowed to suffer defenselessly. I am not a normal industrialist. SEBI cannot ban me arbitrarily. There is a limit to which the regulator can do an arbitrary action.

Q: By when can we expect you to file that appeal?

A: We will file appropriate orders against SEBI and we will expose the arbitrary nature and corrupt elements inside SEBI.
Q: When did this order reach you?

A: It didn't reach. SEBI does not have any courtesy to send any orders. They expect us to read the SEBI's site, which is not properly updated. We send thousands of letters; they don't even acknowledge a reply.

Q: Since you have been banned for seven years?

A: We have not been banned. It has not been communicated to me. I do not have any constructive notice. I will not take cognisance of it. I do not need to know it from its website. I will not take a constructive notice. They should have the courtesy to communicate to me about the ban.

Q: So I am imagining, you haven't received any communication of whether you are going to be delisted or whether this company is going to be delisted?

A: No, the company cannot be delisted.

Q: But if you go by the ban it does say, I mean the website does say that it is a seven-year ban?

A: Trading is not accessing the securities market.