SEBI imposes fine of Rs 1.1cr on PSTL promoter Swaminathan
Regulator SEBI today imposed a penalty of Rs 1.1 crore on promoter and Managing Director of Pyramid Saimira Theatre Ltd (PSTL), P S Swaminathan, for indulging in fraudulent and unfair trade practices and violating market regulations.
July 28, 2011 / 20:52 IST
Regulator SEBI today imposed a penalty of Rs 1.1 crore on promoter and Managing Director of Pyramid Saimira Theatre (PSTL), PS Swaminathan, for indulging in fraudulent and unfair trade practices and violating market regulations.
The case relates to PSTL's involvement 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 lured the general public to invest in the shares of the company based on such false financial statements."After taking into consideration all the facts and circumstances of the case... impose a penalty of Rs 1 crore under Section 15 HA of the Sebi Act and Rs 10 lakh under Section 15 HB of the Sebi Act (i.e. a total penalty of Rs 1.1 crore) against the Noticee (P S Swaminathan) which will be commensurate with the violations committed by him," the market regulator said in an order.While Section 15 HA deals has provisions for imposing penalties in case of fraudulent and unfair trade practices, under Section 15 HB penalty could be imposed for contravention where no separate penalty has been provided.Saminathan was the promoter and MD of PSTL during the period when the irregularities took place and was alleged have published false and misleading financial results of PSTL. It was also observed that company allotted convertible warrants to Saminathan on preferential basis without receiving consideration thereof.Besides, it was alleged that PSTL did not maintain proper books of accounts and did not cooperate with the investigation by failing to produce various documents and records required during investigation despite issue of several summons.The Securities and Exchange Board of India had initiated inquiry on the irregularities in November, 2009 and a show-cause notice was issued against Swaminathan in April, 2010. A month later, Swaminathan sent a reply denying all the charges. Besides, he made further submission before SEBI in the following months.PSTL claimed to have entered into lease/hire agreements with 765 theatres in various states as on March 31, 2008, and with 802 theatres as at the end of June 2008. However, during investigation it was able to show copies of only 257 such agreements with SEBI. The market regulator also found that no money was paid by PSTL to some theatres for creation of security deposits.Swaminathan was also accused of impeding proceedings on as he claimed that SEBI is not an expert body on accounts and questioning the authority of the regulator to pass comments on the the accounts maintained by the company.SEBI observed that the investigation report also does not dwell on the extent of specific gains made by the Swaminathan.
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