Sucheta Dalal :FORGERY BY SEBI INSIDER
Sucheta Dalal

Click here for FREE MEMBERSHIP to Moneylife Foundation which entitles you to:
• Access to information on investment issues

• Invitations to attend free workshops on financial literacy
• Grievance redressal

 

MoneyLife
You are here: Home » Current Articles » FORGERY BY SEBI INSIDER
                       Previous           Next

FORGERY BY SEBI INSIDER  

August 10, 2010

The infamous “forged letter” in the sensational Pyramid Saimira case may be the work of a manager of SEBI called J D’Souza

The Pyramid Saimira case has taken another sensational turn, with the finding that the allegedly ‘forged’ letter asking the company to make an open offer at Rs250 a share within 14 days (when the ruling market price was Rs70), emanated from the watchdog body itself. The facts, as we have reported in our web-magazine, are as follows. A manager attached to SEBI’s investigation department, J D’Souza, allegedly forged the letter. It was couriered to the company on 19 December 2008, listing SEBI as the consignee and with instructions to deliver it only on 22nd December, and not the next day.

Meanwhile, stockbroker Nirmal Kotecha, then a co-promoter of Pyramid Saimira, caused the share price to flare up on 22nd December by planting the report about SEBI’s strange order, in a couple of newspapers. The open offer became a possibility after PS Saminathan, chairman of Pyramid Saimira, decided to buy Mr Kotecha’s 25% stake. The price flared up and Mr Kotecha, who is credited with masterminding this operation, made a killing.

The trail to Mr D’Souza is also interesting. SEBI continues to track down the network of dummy bank and depository accounts that Nirmal Kotecha set up for this market manipulation. One way was to track down all those who were in frequent telephonic contact with the broker. This led them to a number that belonged to one Sameer Gawli, who was traced to Bhandup (a Mumbai suburb) and questioned. Mr Gawli said that the SIM card acquired in his name was given to advocate Prakash Shah who employed him. Mr Shah has appeared before SEBI in several matters and is himself the subject of regulatory action. When questioned in March this year, Mr Shah revealed that he had given a phone with that SIM card to SEBI manager J D’Souza. Ever since, SEBI has been trying hard to keep a lid on the involvement of its own official. Mr D’Souza apparently resigned in May, but his exit has not yet been cleared.

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. Also, given that the regulator has been pretty tough with journalists and PR professionals involved in the manipulation and charged them officially, it must explain why it is dragging its feet on initiating action against its own officer.

After all, it has already filed a case of forgery with the police, way back in December 2008. It only needs to name the offender for this serious charge. 

Meanwhile, SEBI’s attempt to discipline advocate Shah has also been messy. Instead of reporting him to the Bar Council, SEBI decided to ban him from appearing before the regulator in another case. This matter went before the Securities Appellate Tribunal where SEBI, although represented by the state attorney general, had to beat a hasty retreat and withdraw the case. — Sucheta Dalal


-- Sucheta Dalal



 



Recent Comments