The Securities and Exchange Board of India (Sebi) has banned Pyramid Saimira Theatre Ltd (PSTL) from dealing in securities in any manner or accessing the capital market for a period of seven years in a case relating to cornering of employees’ quota shares in the company’s initial public offering (IPO).

According to the Sebi order, an investigation into the allotment of 4,22,200 shares reserved for the employees by Pyramid Saimira in its IPO in December 2006 revealed that PSTL allotted 98.5% of shares under the employee category to seven persons — Kishore S. Jain, Jayantilal R. Jain, Shripal J. Shah, Rajesh Prakashchandra Jain, Pravin Kumar Devichand Jain, Dheeraj Jain and Sanjay Jhabak — who were not its employees.

“In collusion with PSTL, these seven persons donned the cloak of ‘employee’ on the eve of the public issue for 4 to 6 months, applied for shares in the employee category and received the allotment, sold the shares soon after listing and made an unlawful gain of Rs 2.31 crore,” the Sebi order said.

“Pyramid Saimira should include this order in the agenda of its next annual general body meeting,” the order said.

According to the regulator, PSTL submitted that a direction against PSTL from accessing the markets or from dealing in securities would not be in the interest of the capital market. “I fail to appreciate this argument as to how the capital market would suffer if it were not allowed to participate in the market. The market is orderly if there are no miscreants. In fact, the interests of investors require that no miscreant is allowed to participate in the market,” Sebi wholetime member MS Sahoo said in his order.

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