The Securities and Exchange Board of India (Sebi) on Tuesday imposed penalties totalling ₹2.04 crore on 17 entities for non-compliance with its investigation into alleged financial irregularities at Eros International Media Ltd (EIML).
The markets regulator’s preliminary findings suggested the potential siphoning of funds and manipulation of financial records, particularly concerning write-offs and provisions for content advances and trade receivables.
Sebi issued summons to directors of three associated entities: Nextgen Films Pvt. Ltd (now Viyanaa Media Works Pvt. Ltd), Spicy Entertainment & Media Ltd, and Upkar Dealtrade Pvt. Ltd, which had entered into agreements with Eros, to ascertain whether the movies financed by Eros were indeed produced.
The directors were asked for personal appearances and were required to submit relevant documentation. However, despite multiple opportunities to comply, Sebi found that none of them appeared in person before the investigating authority and provided only partial information, hampering the investigation’s progress.
Sebi’s adjudicating officer held that this violated provisions of the Sebi Act, which mandated cooperation with investigations.
“The available records do not quantify the disproportionate gain made by the noticees or the amount of losses suffered by the investors due to non-compliance with the summons. However, such non-compliance should be viewed seriously,” the regulator held.
Barnali Mukherjee, the adjudicating officer, said: “The same thwarted Sebi’s attempts to effectively gather vital evidence for the timely conclusion of the investigation proceedings.”
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As a result, Sebi imposed a monetary penalty of ₹12 lakh on each of the 17 directors involved. “If persons are allowed to flout the summons issued to them during the course of the investigation, Sebi, as the watchdog of the securities market, will not be able to discharge its statutory obligations in protecting the interests of the investors and safeguarding the integrity of the securities market,” read the Sebi order.