The Securities and Exchange Board of India (SEBI) has dismissed settlement applications submitted by Zee Entertainment Enterprises (ZEEL) and Punit Goenka on Thursday, January 2, and requested additional investigation into the issue. While SEBI did withdraw the show cause notices issued to Zee, Subhash Chandra, and Punit Goenka for purported breaches of SEBI regulations, it mandated the consolidation of the contents of the show cause notices into the ongoing broader investigation.
“The allegations in the SCN dated July 06, 2022 issued by AO are to be subsumed with the findings of the further investigation carried out by SEBI in the instant matter. Accordingly, the content of the SCN dated July 06, 2022 issued by the AO including the examination report and all the relied upon documents will be treated as an integral part of the further investigation report by SEBI in the matter of ZEEL,” the Sebi order said.
The matter concerns an adjudication process that was commenced against Zee Entertainment Enterprises pursuant to Section 23E of the Securities Contracts (Regulation) Act, 1956.
Sebi has referred the matter for further investigation. 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.
Shares of ZEE ended at Rs 123.95 on the BSE on Thursday, up by 0.73%.
Sebi mentioned that the examination report and all other relied-upon documents will be included as a crucial part of the ongoing investigation. The initial show-cause notice will also be referenced in future notices to be issued.
Consequently, Sebi’s decision in August 2023 led to Chandra and Punit Goenka being prohibited from occupying key positions in four group companies. Sebi had previously accused promoters from Shirpur Gold Refinery, an Essel Group entity, of engaging in fraudulent practices and diverting funds in June 2023. As a result of Sebi’s actions against the founders, the $10 billion merger between Zee and Sony India unit was disrupted.
The regulatory authorities are currently investigating the alleged misappropriation of funds by Chandra and his son, Punit Goenka. The initial inquiry involves a letter of comfort (LoC) amounting to Rs 2,000 crore. However, Sebi informed the Securities Appellate Tribunal (SAT) that additional LoCs are also being scrutinized, including one worth Rs 4,210 crore issued by Chandra in his capacity as the chairman of Essel Group.
The SAT granted Goenka relief from the ban.