Shillong, June 18: The Securities and Exchange Board of India (SEBI) has responded to the Securities and Appellate Tribunal (SAT) regarding the Zee Enterprises case, highlighting that Subhash Chandra, Chairman Emeritus, and Punit Goenka, Managing Director and CEO, have allegedly redirected public funds to private entities. SEBI’s reply to SAT stated, “In the instant case, we have a situation before us where the Chairman Emeritus and the Managing Director and CEO of this large listed company are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons.”
Subhash Chandra and Punit Goenka have approached SAT to challenge SEBI’s order that prohibits them from holding directorial positions or key management roles in any listed company due to alleged fund diversion from Zee Enterprises.
SEBI further noted, “The Appellant’s conduct is telling in this regard. Not only have there been violations but also the issuance of multiple false disclosures and submission of statements to cover up such wrongdoings. In Shirpur, we have also seen that the promoter group timed its offloading of shares in the open market to avoid bearing the brunt of the fall in the market value of Shirpur’s shares. It is ultimately the small retail investors who endured the downfall in share price.”
ZEEL, being one of India’s top 200 largest listed companies, holds a significant position in the Indian securities market, with numerous public shareholders and retail investors.
SEBI emphasized, as stated in the contested order, that the Appellants used sham entries to create a façade, misleading investors and regulators into believing that the money had been returned by Seven Related Companies when, in reality, it was ZEEL’s own funds that went through multiple layers before ending up in ZEEL’s account. SEBI believes that these facts warrant immediate action to protect the management of such companies and safeguard the interests of investors and stakeholders.
Furthermore, SEBI stated that if a preliminary examination suggests prima facie evidence of manipulation in the securities market, the organization is obliged to issue an ex-parte ad interim order to safeguard investor interests and maintain the integrity of the securities market.
The manner in which funds flowed from one promoter company to another indicates that the funds of ZEEL and other listed companies were allegedly utilized by the promoters to create a false impression that the Seven Related Parties had repaid the Rs 200 crore amount (appropriated by Yes Bank) to ZEEL.