Sebi defends its order against Zee Entertainment promoters

  • Sebi’s submission comes in response to a plea by Goenka and Chandra challenging the regulator’s order, restraining them from holding key managerial positions in listed firms.

Priyanka Gawande
Published18 Jun 2023, 09:42 PM IST
Sebi alleged in its 12 June order that the father-and-son duo used various entities to siphon off ZEEL’s funds to falsely show recovery of loans, but used it for their own benefits in 2019.
Sebi alleged in its 12 June order that the father-and-son duo used various entities to siphon off ZEEL’s funds to falsely show recovery of loans, but used it for their own benefits in 2019.(HT_PRINT)

Zee Entertainment Enterprises Ltd chairman emeritus Subhash Chandra, and chief executive and managing director Punit Goenka, are involved in a multitude of schemes and transactions where large sums of public funds from listed companies have been diverted to private entities controlled by them, the Securities and Exchange Board of India (Sebi) said in an affidavit filed before the Securities Appellate Tribunal.

“The appellant’s (Goenka and Chandra) conduct is telling. Not only have there been violations but also the issuance of many false disclosures and submission of statements to cover up such wrongdoings. In Shirpur, we have also seen that the promoter group timed the offloading of its shares in the open market to avoid bearing the brunt of the fall in the market value of Shirpur’s shares. It was ultimately the small retail investor who endured the fall in the share price,” it said.

Sebi’s submission comes in response to a plea by Goenka and Chandra challenging the regulator’s order, restraining them from holding key managerial positions in listed firms.

Sebi alleged in its 12 June order that the father-and-son duo used various entities to siphon off ZEEL’s funds to falsely show recovery of loans, but used it for their own benefits in 2019. The duo later filed an appeal before the SAT, claiming innocence, and alleging that the principles of natural justice weren’t followed.

“In fact, if during a preliminary examination, it is found prima facie that the person is indulging in the manipulation of the securities market, Sebi is obliged to pass an ex-parte ad interim order to safeguard the interest of investors and protect the integrity of the securities market,” according to the 197-page affidavit filed by Sebi.

Sebi further alleged that the two created a facade through sham entries to misrepresent to investors as well as the market regulator that the sum was returned by seven related firms, while, ZEEL’s funds were circulated through complex channels, ultimately funnelling back to its account.

Queries to Sebi and ZEEL didn’t elicit any response.

People in the know said Goenka and Chandra are in the process of filing rejoinders.

The appellants argued that they cannot be charged under PFUTP Regulations since the securities had not been dealt in. Sebi, however, submitted that such an argument is ‘misconceived’.

These facts reasonably warrant urgent action on the part of the Sebi to safeguard the management of such companies and protect their investors and other stakeholders, Sebi said.

“There is no merit in any of the prayers and reliefs sought by the Chandra and Goenka in the present appeals before the SAT. It is also prayed that in the interest of public shareholders of ZEEL as well as the integrity of the securities market, the directions in the Impugned Order of June 12 be upheld”, it added.

The tribunal had granted Sebi 48 hours to the regulator to file its reply in the matter. Today, the SAT will pass its verdict in the matter.

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First Published:18 Jun 2023, 09:42 PM IST
HomeCompaniesNewsSebi defends its order against Zee Entertainment promoters

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