In crackdown against Zee, SEBI summons MF CEOs and rating agency chief for quizzing

National |  IANS  | Published :

New Delhi, Feb 3 (IANS) In what finally appears to be a crackdown against Zee, consequent to the enforcement of securities by two lenders on Friday, Member SEBI Madhabi Puri Buch has finally summoned the four CEOs of Birla MF, ICICI MF, HDFC MF and RELIANCE MF and the CEO of ratings agency Brickworks on Monday to quiz them on the matter.

This looks like a case for punitive action by SEBI. 

On January 27, Zee Chairman Subhash Chandra stated that an agreement had been reached with lenders; the next morning his son said 96-97 per cent lenders have approved; the stock rose from Rs 310 to Rs 380; by Friday it became clear that no agreement had been signed; further two lenders enforced securities and sold shares, proving the statements of January 27 and 28 were clearly fraudulent and misleading.

It is a tale of failure across the food chain:

*Stock exchanges: Made no attempt for a full week to verify the truth of publicly announced claims on the alleged settlement with lenders, and/or details in respect of the same

*Rating Agency Brickworks - did not downgrade securities despite fall in security cover; made no attempt to verify the truth of publicly announced claims on the alleged settlement with lenders, and finally, on Friday, still referred only to "reported" settlement, whereas it has powers to have called for all details from the Borrowers

*MFs - did not disclose breach of covenants on borrowings to their investors; attempted to brush breaches under the carpet by discussing private "settlement" without approvals from their Board of Directors/Trustees; did not refute false public claims on settlement by promoters despite knowing full well there was no agreement signed

*SEBI - Did not haul up MFs for attempting to privately discuss/"settle" default situation without informing their investors about the same, and without any formal internal approvals

- did not haul up stock exchanges for week long inaction

- did not haul up rating agency for week long inaction

- has not taken any action against promoters for blatant fraud and misrepresentation

As of Friday, Feb 1, not even 10% of lenders had signed off on the alleged "settlement." Based on the enforcement of securities by two lenders, the company has called emergency meetings of lenders this past weekend to secure approvals. 

The fact remains that as on Jan 27th/28 when the announcements were made by Zee Chairman, Subhash Chandra and his son regarding the alleged 96-97% approvals to the so-called settlement, there was absolutely nothing signed off by lenders for even a week thereafter, and all announcements to that effect were patently false and misleading.








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