Sebi calls for urgent action against Filesadmin.co promoters in its reply to SAT

Market regulator Sebi in its response to the Securities and Appeals Tribunal (SAT) on Filesadmin.co Entertainment Enterprises Ltd’s appeal called for urgent action against the promoters in the alleged money transfer case to protect management, investors and other stakeholders.

In an affidavit, the Securities and Exchange Board of India (SEBI) noted that the applications made by Chairman Emeritus Subhash Chandra, Managing Director and Chief Executive Officer Puneet Goenka on July 6, 2022, “there was no urgency and the same issue is the subject of the offer-cause notice dated July 6, 2022 is completely false and misleading.”

“Not only were there violations, but many false disclosures were made and statements were made to cover up such wrongdoing,” Sippy added.

“In this case, we have a situation before us where the honorary chairman, managing director and CEO of this large listed company is involved in a myriad of different schemes and transactions through which huge sums of public funds belonging to listed companies are transferred to private entities owned and controlled by him. those people “.

On June 15, the SAT directed them to respond to Sippy’s request on or before June 19, when the court will hear the matter for final determination.

In the June 12 temporary order, Sippy has banned Essel Group Chairman Subhash Chandra and Filesadmin.co Entertainment Enterprises Ltd (ZEEL) MD and CEO Punit Goenka from serving as a director or key management officer in any listed company for media-stealing assertiveness.

Chandra and Goenka transfer SAT seeking accommodation on Sebi’s request, citing injustice.

Sippy also asserted that the appellants had not submitted any materials indicating that they had suffered any prejudice by not obtaining a personal hearing prior to passing the interim order.

The regulator said it was ready to provide an immediate hearing for the appellants as soon as possible.

In the affidavit, Sebi alleged that the promoters created a front through bogus entries to misrepresent investors and the regulator about the Rs 200 crore payment to ZEEL by seven related parties.

Sippy said the current investigation was launched after ZEEL’s settlement request was rejected in the Essel Group-company Shirpur Gold Refinery (Shirpur) case, for which the regulator issued an interim order in April.

“In Shirpur, we also saw that the group of promoters timed their offloading of shares on the open market to avoid bearing the brunt of the decline in the market value of Shirpur shares. Ultimately, the drop in share price was borne by small retail investors,” said the market regulator.

Sippy said the Sherpur case reflected a contrived scheme with a series of bogus transactions intended to mislead and facilitate the indirect movement of funds.

SEBI initiated the process of obtaining bank statements from the various banks involved and traced the source of funds used by the relevant party to ‘pay off’ ZEEL.

In investigating the transactions contained in the bank statements along with the counterparties to such transactions, SEBI found some glaring irregularities.

“While ZEEL claimed that it had received payment of funds from related parties due to the amendment by Yes Bank, SEBI found that these funds originated from ZEEL itself and/or the Essel Group of Companies (which includes ZEEL). Therefore, ZEEL has effectively financing its own repayment.

In fact, Sippy said, a large number of the entities that were used as a conduit to collect and pass the money overlap with the entities involved in the Shirpur investigation as well.

“These entities are part of the Essel Group, either through common shareholding, control, management or group name. Furthermore, these entities appear to be beneficially owned by the appellants and their family members,” it added.

In November 2019, two independent directors, Subodh Kumar and Niharika Vohra, resigned citing poor corporate governance and FD allocation to pay promoters’ loans as reasons behind their resignation.

Meanwhile, the National Companies Law Tribunal has postponed the hearing on ZEEL’s potential merger with Sony Pictures Networks India to June 26.