Mumbai: The Enforcement Directorate (ED), the Indian government agency that investigates violations of the country’s foreign exchange laws, is examining possible infractions by Pyramid Saimira Theatre Ltd (PSTL) and its promoters under the Foreign Exchange Management Act and the Prevention of Money Laundering Act, a senior ED official said on Friday.
“We are looking into the Pyramid Saimira matter although the department has not received any communication from the Securities and Exchange Board of India (Sebi),” said the official, asking not to be identified. He declined further details. “It is too early to comment on the case.”
Under shadow: Pyramid Saimira group chairman P.S. Saminathan.
Under the Prevention of Money Laundering (Amendment) Bill, 2009, violation of Sebi’s insider-trading norms and cases of market manipulation can be investigated by ED.
In an interim order on Thursday, markets regulator Sebi barred PSTL promoters Nirmal N. Kotecha and P.S. Saminathan for forging a Sebi document in December that purportedly allowed the firm to have an open offer.
The order in PSTL case relates to media reports at the time that Sebi had directed Saminathan to make an open offer for an additional 20% stake at a price not less than Rs250.
Later, the market regulator clarified that no such order or letter had been issued by Sebi to Saminathan.
The regulator conducted a probe into the matter, which prima facie showed that the forgery was done to manipulate the stock price of PSTL, Sebi said. In its Thursday interim order, Sebi also debarred 228 persons and entities from trading in the markets, including initial public offerings.
It also barred Rakesh Sharma, a former executive of Adfactors PR Pvt. Ltd, and Rajesh Unnikrishnan, an assistant editor with The Economic Times, from any activity, either direct or indirect, in the equity markets.
Sebi further said the probe prima facie found that Kotecha was one of the major beneficiaries of the manipulation and appeared to have largely masterminded the forgery. The regulator also said he was found to be using a large number of front accounts, including those of his relatives and associates and their entities, to manipulate the market and to route funds through several layers to hide their source and flow, and that this prima facie appeared to be a money laundering activity.
A copy of the order has also been sent to the Financial Intelligence Unit-India and the Reserve Bank of India for further verification.
“These acts of 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 Nirmal Kotecha in these activities,” Sebi said in the order.