The capital market regulator, the Securities and Exchange Board of India (SEBI) has imposed a total penalty of ₹2.04 crore on 17 entities for failing to comply with its investigation into alleged financial irregularities at Eros International Media Ltd (EIML).
Preliminary findings from SEBI indicated possible fund siphoning and manipulation of financial records, particularly regarding write-offs and provisions related to content advances and trade receivables.
SEBI summoned the directors of three associated entities—Nextgen Films Pvt. Ltd (now Viyanaa Media Works Pvt. Ltd), Spicy Entertainment & Media Ltd, and Upkar Dealtrade Pvt. Ltd—to determine whether the films financed by Eros were actually produced. The directors were required to appear in person and provide relevant documentation. However, despite several opportunities, none attended the hearings, and only partial information was submitted, hindering the investigation’s progress.
SEBI’s adjudicating officer found this lack of cooperation to be a violation of the SEBI Act, which mandates compliance with investigations.
While the records did not quantify the disproportionate gains by the notices or the losses suffered by investors due to this non-compliance, SEBI emphasised the seriousness of the matter. Barnali Mukherjee, the adjudicating officer, stated, “This behaviour obstructed SEBI’s efforts to effectively gather crucial evidence for a timely conclusion of the investigation.”
Consequently, SEBI levied a penalty of ₹12 lakh on each of the 17 directors involved. The SEBI order asserted, “Allowing individuals to disregard summons during investigations undermines SEBI’’s role as the guardian of the securities market and its ability to protect investor interests and maintain market integrity.”
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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