In its ongoing investigations into Zee Entertainment Enterprises (ZEEL), the Securities and Exchange Board of India (SEBI) has rejected a settlement application filed by the company and its chief executive officer (CEO), Punit Goenka. The regulator has also expanded the scope of the investigation, under which the media firm’s former chairperson, Subhash Chandra, is also under the scanner.
In an adjudication order issued on Thursday, the market regulator pointed out that Zee and Goenka had filed a settlement application for alleged violations of the Listing Obligations and Disclosure Requirements (LODR) Regulations. SEBI had issued a show-cause notice in the matter in July 2022.
“The panel of Whole Time Members of SEBI rejected the settlement applications and also referred the matter to SEBI for further investigation. In this regard, it has been observed that subsequent to the completion of the investigation in the instant matter, it has been decided by the Competent Authority to proceed against the Notices under Section 11B of SEBI Act 1992,” said SEBI in the order.
The market regulator has highlighted that the allegations in the July 2022 show-cause notice will be subsumed with the findings of the further investigation carried out by SEBI.
SEBI added that the examination report and all other documents relied upon will be treated as an integral part of the further investigation, and the earlier show-cause notice will be incorporated in further notices to be issued in the matter.
The markets regulator is investigating the alleged fund diversion by Chandra and his son, Punit Goenka. The initial order pertains to a letter of comfort (LoC) granted to the tune of Rs 2,000 crore. However, SEBI had submitted before the Securities Appellate Tribunal (SAT) that more LoCs were under scrutiny, including one to the tune of Rs 4,210 crore issued by Chandra in his capacity as the chairman of Essel Group.
The contents of the Show Cause Notice dated July 06, 2022 issued by the Adjudicating Officer (AO) to ZEEL, Chandra and Goenka will also be incorporated in the new SCN to be issued following further investigations.