Zee Entertainment stock price jumped 5 per cent on Wednesday after a statement by Sony Pictures Entertainment headquarters on the proposed merger.
While the statement seems to be ambiguous, markets have given a thumbs up to Zee Entertainment.
A statement by Sony Pictures Entertainment (SPE) Headquarters in Culver City said: "There have been several erroneous press reports recently speculating about the future of ZEE's planned merger with SPNI following SEBI's interim order against Subhash Chandra and Punit Goenka. We take very seriously the SEBI interim order and will continue to monitor developments that may affect the deal."
SEBI has pointed out in its reply in the matter of Zee Enterprises to Securities and Appellate Tribunal that Chairman Emeritus and Managing Director and CEO of this large listed company have diverted public money to private entities.
"In the instant case, we have a situation before us where the Chairman Emeritus and the Managing Director and CEO of this large listed company are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons," SEBI said in its reply to SAT.
Subhash Chandra and Punit Goenka have moved SAT against the SEBI order barring them from holding director positions or key management personnel in any listed company on allged siphoning of funds from Zee Enterprises.
"The Appellant's conduct is telling in this regard. Not only have there been violations but also the issuance of multiple false disclosures and submission of statements to cover up such wrongdoings. In Shirpur, we have also seen that the promoter group timed its offloading of shares in the open market to avoid bearing the brunt of the fall in the market value of Shirpur's shares. It is ultimately the small retail investors who endured the downfall in share price," SEBI added.
ZEEL is one of the top 200 largest listed companies in India today having large number of public shareholders and retail investors and therefore, occupies a prominent position in the Indian securities market.
SEBI said as noted in the impugned order that the Appellants created a facade through sham entries to misrepresent to the investors as well as the regulator that the money had been returned by Seven Related Companies, whereas in reality, it was ZEEL's own funds which rotated through multiple layers to finally end in ZEEL's account.
These facts reasonably warrant urgent action on the part of the Respondent to safeguard the management of such companies and protect their investors and other stakeholders.