The Securities and Exchange Board of India (SEBI) has barred stock market trader Nirmal Kotecha from the securities market for 14 years for his alleged role in the Pyramid Saimira matter.
The capital market regulator has also imposed a penalty of almost ₹72 lakh, which, according to SEBI, includes an unlawful gain of ₹38.75 lakh and interest at 12% per annum since December 2008.
“... in order to protect the interest of investors and the integrity of the securities market... hereby restrain Nirmal Kotecha, from accessing the securities market and further prohibit him from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of 14 years,” said a 73- page order issued late on Thursday by whole time member G. Mahalingam.
The case goes back to December 2008 when media reports stated that the regulator directed P.S. Saminathan, one of the promoters of Pyramid Saimira Theatre to make an open offer at ₹250 per share for allegedly violating creeping acquisition norms. The stock price at that time was around ₹80.
The company, however, made an announcement on the stock exchanges that it had received no such letter from SEBI. Enquiries revealed that the letter was forged and an investigation was ordered in the matter to ascertain the illegal beneficiaries in the matter.
According to the SEBI probe, Mr. Kotecha along with a group of other persons and fronts, did circular trading in the shares of Pyramid Saimira and started pushing up the price, six months prior to allegedly circulating the forged letter in the media.
Thereafter, he offloaded his large stake in the company at the “artificially inflated” price to make unlawful gains, as per SEBI probe.
“... (Nirmal Kotecha) earned a sizeable profit, by forgery and by dissemination of the false information contained in the forged letter to the media in an attempt to mislead the media to believe in the authenticity of the information that was circulated to them,” said the SEBI order.
