Pyramid Saimira: Finger points to SEBI Manager in forged letter case
July 21, 2010 03:20 PM
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Sucheta Dalal
Moneylife learns that the infamous “forged letter” in the sensational Pyramid Saimira case may be the handiwork of a manager of SEBI called J D’Souza.
The case against Pyramid Saimira is taking another sensational turn. Moneylife learns from informed sources, that the “forged letter” may be the handiwork of a Manager of the Securities and Exchange Board of India (SEBI) called J D’Souza. He was attached to the investigation department. Ironically, it is SEBI’s thorough, police-style investigation that led to the SEBI insider in May. He has tendered his resignation soon after, but has yet to be released.
The story goes back to December 2008, when PS Saminathan, chairman of Pyramid Saimira received a letter, purportedly from SEBI, asking him to make an open offer for 20% of the floating stock at not less than Rs250 a share within 14 days (the ruling market price then was Rs70). This followed his decision to acquire the 25% stake held by two co-promoters, one of whom was Nirmal Kotecha, a stockbroker.
Naturally, the stock price soared and several vested interests made a killing. SEBI woke up a good 24 hours later and launched an investigation after declaring that it had not sent any such letter to Mr Saminathan. The subsequent investigation exposed an unholy nexus between Saminathan and Kotecha promoters and a series of dubious dealings by Nirmal Kotecha, who was found to have created a network of dummies, whose bank accounts, depository accounts and mobiles were systematically used to cover up the price manipulation and pump-and-dump operations.
While SEBI sleuths tracked the murky underbelly of market manipulation by tracking mobile phone locations and questioning journalists and PR professionals, the original forgery on SEBI’s letterhead was apparently forgotten until May this year. However, there have been frequent rumours that the forged letter actually emanated from within SEBI and was couriered from its premises.
We now learn that SEBI discovered the involvement of its own official in the process of tracking all calls made by stockbroker Nirmal Kotecha and tracing them to specific geographical locations. It discovered one mobile phone to which there were many calls. The phone was traced to one Sameer Gawli of Bhandup (a Mumbai suburb). When he was tracked down, Mr Gawli is understood to have said that he works for an advocate named Prakash Shah, who is being investigated on several matters( http://www.moneylif
Advocate Shah was called in for questioning in March and it is he who revealed that he had given a SIM card, purchased in the name of Sameer Gawli, to the SEBI Manager J D’Souza.
SEBI has since discovered a series of calls made by its manager to Nirmal Kotecha. Sources inside SEBI say that it hopes to complete its investigation by July end and present it to the Securities Appellate Tribunal, where it has several other cases pending in the Pyramid Saimira case.
It has been more than 18 months and SEBI has been conducting a surprisingly slow investigation into the forged letter. So far, it has not even sent it for a forensic investigation to check the paper and stationery and to figure out whether other officials were involved in the action. Instead, on 5th April, Whole Time Member Dr KM Abraham issued an internal memo to its own officials saying that Advocate Shah was to be barred from appearing in cases before SEBI (this internal memo was suddenly withdrawn today, probably as a result of a series of questions that Moneylife mailed to top SEBI officials including the chairman). The action against Advocate Shah has acquired a life of its own and led to a couple of applications under the Right to Information Act, culminating with a hearing before SAT, but that is another story.
Only recently, SEBI scored a major victory when the Supreme Court, on 16th July, dismissed a petition by Pyramid Saimira challenging a seven-year trading ban imposed on it. The discovery that its own manager was part of the dubious nexus between Pyramid Saimira, its management and former promoter Nirmal Kotecha, is bound to damage SEBI’s frayed credibility.
What is worse, the series of RTI applications surrounding this case and others involving market manipulation seem to suggest that D’Souza is not the only manager who is hand-in-glove with market intermediaries and manipulators. After all, the fact that SEBI has failed to create a statutory reporting system to club cases against the same companies/intermedi
BigGains !!
