SAT dismisses Pyramid Saimira directors appeal against Sebi

The Securities Appellate Tribunal (SAT) today dismissed appeals by four directors of Pyramid Saimira Theatre Ltd against market regulator Sebi’s order restraining them from the market along with monetary penalties.

A major scam had come to light at Pyramid Saimira, which is engaged in the entertainment business, in 2009 and the case involved inflating the company’s profits, a forged Sebi letter, manipulation of share price, among others.

Dismissing the appeal from four directors — promoter and whole-time director N Narayanan, and three independent directors K Natarahjan, K S Kashiraman and G Ramakrishanan, SAT said that they “have not lived up to the responsibility of duty of care” as directors of the company.

“The appellants have employed a device so as to defraud investors in dealing in the securities. They have also perpetrated fraud as defined,” the SAT observed, while upholding Sebi’s restrain orders and monetary penalty imposed on them.

In the same case, the Tribunal (SAT) stayed another Sebi order against 11 persons, who were directors and partners, of certain companies who were alleged to have helped one of the promoters of Pyramid Saimira in carrying out suspicious banking transactions.

Previously, SAT had stayed the Sebi order till the final order of the market regulator against the companies with which these persons were associated, on the ground that more than three years have passed since the interim directions in 2009.

These companies and the associated persons were barred from the securities market as per Sebi’s interim order, following which they had approached the tribunal.

“The findings/observations in the impugned order were against the companies and consequently the restraint order was passed against the directors also,” the Tribunal said while passing its order against 11 entities.

“When the restraint order against the companies has been vacated, in the absence of any other reason on record, we see no reason as to why the restraint order should continue against the appellants before us,” it added.

Consequently, the SAT stayed an order passed by market regulator against 11 individuals, who were directors and partners, of lesser known companies.

The market regulator, in its ex-parte interim order in April 2009, had barred 230 little known entities — including stock brokers and investment outfits — in the matter for having carried out suspicious banking transactions, including channelling funds either directly or indirectly in the stock markets during the period in Pyramid Saimira case.

After giving an opportunity of hearing, the Sebi, in December 2009, confirmed the exparte ad-interim order against 20 entities, however, no order was passed against rest of them.