Mumbai, Nov. 10: The Securities and Exchange Board of India (Sebi) today barred Pyramid Saimira Theatre Ltd (PSTL) from accessing the capital markets for a period of seven years.

The ban came after the market regulator found out that PSTL had helped seven individuals to pose as employees of the company and corner shares earmarked for staff during its initial public offering in December 2006.

Sebi conducted a very detailed investigation into the allotment of 4,22,200 shares reserved for the employee category by PSTL in its IPO. It discovered that the company had allotted 98.5 per cent of shares under the employee category to seven persons who were not its employees.

“In collusion with PSTL, these seven persons donned the cloak of employee on the eve of the public issue for four to six months, applied for shares in the employee category and received the allotment, sold the shares soon after listing and made an unlawful gain of Rs 2,31,94,612,” Sebi said.

It added that while a common showcause notice was issued to PSTL in February 2008, the company made “serious attempts to derail the proceedings’’.

Sebi discovered that all the seven persons were settled in Mumbai and were involved in the textile business. The banking transactions of these persons indicated that they were high net worth individuals.

The market regulator checked the employee records and the provident fund records and determined that they were bogus employees. The company had tried to cover its tracks by claiming that these employees had been paid their salaries in cash.

Investigations revealed that the vouchers were dubious: they did not have serial numbers and the names or initials of the people who sanctioned and approved the payments.

When the market regulator insisted on checking the provident fund records, the company approached the EPFO in Chennai seeking to enrol these employees as members.

“PSTL aided and abetted the seven persons to corner shares …under the employee category to the detriment of common investors,” Sebi whole-time member M.S. Sahoo said in his order.