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Letter forged, say Sebi, Pyramid Saimira
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December 24, 2008 02:22 IST
Last Updated: December 24, 2008 09:31 IST

Pyramid Saimira Theatre [Get Quote], the Chennai-based entertainment firm, was in the limelight on Tuesday after it announced it was the victim of a forgery and the stock was frozen at circuit filer of 10 per cent on the Bombay and National Stock Exchanges for the second day in a row.

In an early morning statement, the company confirmed it had received a letter from the stock market regulator, Securities and Exchange Board of India, asking its chairman PS Saminathan to make an open offer to buy 20 per cent in the company at Rs 250 a share.

A couple of hours later, Pyramid called a press conference to say Sebi's letter was forged (see below) and that the company planned to launch a formal complaint with the Central Bureau of Investigation.

Meanwhile, Sebi issued a statement saying it had not issued any such letter to the company as has been widely reported in the media. "It appears that the letter is being circulated with ulterior motives," the statement said.

In a release in the evening, Sebi said it was investigating the matter including the origin of the letter. "Sebi is also separately inquiring into the dealing in the scrip following the press reports, including alleged violation of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997," the statement said.

Pyramid Chairman Saminathan told reporters in Chennai it was curious that the courier company, Blue Dart, which delivered the letter, confirmed in writing that it had received instructions from "Sebi" to deliver it on Monday morning. This raised doubts since the regulator normally faxes such letters and does not courier them. Enquiries with Sebi revealed that the regulator had not given any such instruction to any courier firm. "This is a deliberate attempt to defame the company," he said.

Saminathan said he held 24 per cent in the company and wanted to buy another 22 per cent from the other promoter, Nirmal Kotecha, on Monday.

After the leak of the "letter" on Monday, the company's stock surged 10 per cent on reports that the promoters would have to make an open offer to the shareholders to acquire a further 20 per cent stake. On Tuesday the stock closed at Rs 61.15 with more sellers in the queue after hitting an intra-day peak of Rs 82.90 on Monday. Saminathan said 7.5 million shares were traded and 2.5 million deliveries were made. "This is completely unusual," he said.

Saminathan said the Bombay Stock Exchange and the National Stock Exchange should not issue the payouts in investor interest. "They should enquire as to who traded so much on that day and who would benefit, what was the circular pattern adopted, what were the benami accounts that have been used and what were the front accounts," he said, adding trading 7.5 million shares requires pre-paid accounts, margin funding accounts and  a certain amount of planning.

A clarification

Business Standard published a report on the Pyramid affair on Sunday, after Ashok Jainani of Khandwala Securities [Get Quote] emailed to our reporters a copy of what purported to be a Sebi letter to Pyramid Saimira.

The letter, which had a Sebi letterhead, was addressed to P S Saminathan, the company's chairman; it had a file number and a signature purporting to be that of an assistant general manager in the corporate finance department.

Our reporters spoke to Jainani, who confirmed that Sebi had despatched the letter on December 19 -- the date of the signature.

Our reporters then spoke separately to two senior Sebi officials, who said they would not be able to verify the contents of the letter since their offices were closed on Saturday, but that the pattern of the file number was similar to what Sebi letters usually carried, and that there was an assistant general manager in the corporate finance department.

Our reporters then spoke to Pyramid Saimira's CEO, who said he was yet to receive any letter.

On Monday, Pyramid Saimira's corporate communications department confirmed that the company had received the letter.

On Tuesday morning, the company issued a statement that it had received the Sebi communication asking Saminathan to make an open offer to buy 20 per cent in the company at Rs 250 a share. Later, it discovered that the letter was forged.

Like other media organisations, Business Standard was duped by a forgery. We apologise to all our readers, to Sebi and to Pyramid Saimira.

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