The Securities and Exchange Board of India (SEBI) has rejected the settlement applications submitted by Zee Entertainment Enterprises.ZEEL) and Punit Goenka on Thursday, January 2, and called for an additional probe into the issue. SEBI withdrew the show-cause notices issued to Zee, Subhash Chandra and Punit Goenka for violating SEBI regulations, and it mandated the merger of the contents of the show-cause notices into the ongoing wider investigation.
“The allegations in the SCN dated July 06, 2022 issued by the AO must be backed up with the findings of the further investigation conducted by SEBI in the instant matter. Accordingly, the contents of the SCN dated July 06, 2022 issued by the AO including the examination report are all Further investigation by SEBI on the documents will be considered as an integral part of the report of ZEEL,” the SEBI order said.
The matter relates to an adjudication proceeding initiated against Zee Entertainment Enterprises under 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 an arbitration application for violation of Listing Obligations and Disclosure Requirements (LODR) regulations. Sebi has issued a show cause notice in the matter in July 2022.
Shares of ZEE closed up 0.73% at Rs 123.95 on BSE on Thursday.
Sebi noted that the examination report and all other reliable documents will be included as a crucial part of the ongoing investigation. The preliminary publication notice will also be referred to in future notifications.
As a result, Sebi's decision in August 2023 led to Chandra and Punit Goenka being barred from holding key positions in four group companies. In June 2023, Sebi had earlier alleged that the promoters of Essel Group's Shirpur Gold Refinery engaged in fraudulent activities and diverted funds. The $10 billion merger between Zee and the Sony India unit was disrupted due to Sebi's action against the startups.
Regulatory authorities are currently probing the misappropriation of funds by Chandra and his son Punit Goenka. The preliminary investigation includes a letter of comfort (LoC) of Rs 2,000 crore. However, Sebi informed the Securities Appellate Tribunal (SAT) that additional LoCs, including one worth Rs 4,210 crore issued by Chandra as chairman of the Essel Group, will also be scrutinised.
SAT granted Goenka relief from ban.