Sebi action: Not the first run-in for Zee’s Punit Goenka

For Punit Goenka, the managing director and chief executive of Zee Entertainment Enterprises Ltd (ZEEL), this is not the first time that he has been under the scanner of the capital markets regulator Securities and Exchange Board of India (Sebi). On Monday, he was barred by Sebi from becoming director or key management personnel (KMP) in any listed company. 

Just in April, Goenka settled investigations against him by paying Rs 50.70 lakh after being probed for alleged failure to put in place adequate internal controls within the company to identify unpublished price sensitive information (UPSI) and further failed to identify certain information as UPSI. 

The matter dates back to September 2020, when ZEEL announced the launch of ‘Cinema2Home’ service called ZEEPLEX, a pay-per-view new content consumption service that gave consumers the flexibility and convenience to watch movies at home. 

The announcement came during the Covid-19 lockdown and hence was looked upon as a positive news for the company. 

Incidentally, any material development or announcement that can have an impact on the stock price is referred to as UPSI, and the launch of ZEEPLEX, per Sebi, was a material development and hence qualified as UPSI. 

The company, however, failed to identify the development as UPSI as a result of which Sebi initiated investigations under SEBI (Prohibition of Insider Trading) Regulations, 2015 or PIT Regulations. 

Regulation 9A of the PIT regulations, 2015 states: “The Chief Executive Officer, Managing Director or such other analogous person of a listed company, intermediary or fiduciary shall put in place adequate and effective system of internal controls to ensure compliance with the requirements given in these regulations to prevent insider trading.” 

Goenka, the eldest son of Subash Chandra, was the MD and CEO of the company when ZEEPLEX announcement was made and hence a show-cause notice was issued to him on December 22, 2022. 

After the notice, Goenka filed a settlement application to settle the proceedings initiated against him. The settlement process of Sebi allows entities to settle investigations by paying an agreed amount of money without denying or admitting any alleged wrongdoings. 

As mentioned earlier, the matter was settled by paying Rs 50.70 lakh as settlement charges.

Meanwhile, on Monday, Sebi barred Chandra and Goenka from becoming director or key management personnel (KMP) in any listed company for allegedly abusing their positions in ZEEL and siphoning off funds for their own benefit.