Posts Tagged ‘SEBI’

ET joins Mint, has questions on RIL-TV18 deal

20 January 2012

Two days after Mint front-paged a story that SEBI was looking into the Reliance-Network18/TV18-ETV deal, the country’s biggest business newspaper, The Economic Times has joined force.

A story on page 9 of ET, headlined “Will the RIL-TV18 deal trigger takeover code?“, says SEBI “may ask for details” about  Reliance funding Network18/TV18 to help it purchase RIL’s stake in ETV, “if there’s any change in control” [of ownership of Network18/TV18].

“The deal between Reliance Industries and Network18 Group has put the spotlight on the elusive concept of control as some analysts speculate whether the energy-to-education conglomerate’s investment in the media firm could potentially place RIL in effective charge of the Raghav Bahl controlled entity.”

On paper, Reliance will route its investment in Network18 through “Independent Media Trust”. The trust will subscribe to the optionally convertible debentures (OCDs) issued by the holding company of the Network18 group. This money will then be used by the promoters of Network18/TV18 to invest in the rights issues of its two listed companies, purchase RIL’s stake in ETV and repay debts.

The catch is, Reliance can convert its OCDs into equity as some later stage.

ET quotes a Morgan Stanley report of January 6 that the country’s biggest business house may ultimately end up as the single largest shareholder of Network18 Group’s two listed entities.

“Assuming the debentures are converted and that RIL will be the ultimate beneficiary of the promoter’s part of the rights issues, the RIL trust would be the beneficiary of 44% stake in Network18 and 28.5% stake in TV18,” the Morgan Stanley report said.

***

The latest issue of Outlook Business too has a story on the RIL-TV18-ETV deal.

Headlined “Networking a way out”, the intro to the piece reads “The absurd valuation that Network18 is paying for buying a piece in Eenadu defies economic rationale.”

The piece quotes Star India CEO Peter Mukherjea, who calls the deal a marriage of convenience between an ugly bride and a physically challenged groom.

“One was deep in debt and needed to get cash into the business quickly, and the other was sitting on an asset they purchased some years ago but were not able to monetise. Structuring the deal this way provides an escape hatch for both. I guess they both will live happily ever after—or will they?”

Infographic: courtesy The Economic Times

Also read: Mint says SEBI looking into RIL-Network18/TV18-ETV deal

Rajya Sabha TV tears into RIL-Network18-ETV deal

Will RIL-TV18-ETV deal win SEBI, CCI approval?

The sudden rise of Mukesh Ambani, media mogul

The Indian Express, Reliance & Shekhar Gupta

Niira Radia, Mukesh Ambani, Prannoy Roy & NDTV

Tehelka promoter’s woes just don’t seem to end

16 April 2011

K.D. Singh, the controversial promoter behind Tehelka magazine and its shelved Financial World newspaper project, is once again in the news—for the wrong reasons.

Already under a shadow after allegedly buying his way into Parliament last June, and after being stopped at Delhi airport with Rs 57 lakh cash last month, India Today magazine reports that Singh is now under the scanner of the economic offences wing of the Union home ministry.

Reason #1: Singh’s Alchemist group “may have artificially rigged the share prices” in five companies—Usher Agro, Sel Manufacturing, Dhanus Tech, Pyramid Samira and Resurgere Mines.

Reason #2: The stake picked up by two foreign institutional investors (FIIs)—Mavi and Somerset—with links to banned stock market operator Nirmal Kotecha, in Alchemist realty.

The India Today story, authored by former Tehelka business editor Shantanu Guha Ray, says the stock market regulator SEBI is aware of the charges of share-rigging, and is also probing why two Singh companies, Alchemist Limited and Alchemist Realty, did not make mandatory annual and quarterly account disclosures to the Bombay stock exchange (BSE) and the national stock exchange (NSE).

Kotecha had been banned from trading on the stock market in 2009 in a forgery scam involving Pyramid Saimira. (Rajesh Unnikrishnan, an assistant editor of The Economic Times of The Times of India group, and Tatva, a PR firm involved in a joint venture with the Times group, were also banned.)

Shankar Sharma, an earlier Tehelka promoter, too had run into problems with SEBI, and faced charges of manipulating the market with advance knowledge of Operation Westend, a sting operation that caught the then BJP president Bangaru Laxman with his hand in the piejar.

Photograph: courtesy Alchemist

Also read: Moneybag MP says he didn’t turn off FW tap

‘If we don’t get it first, why should we want it?’

11 October 2010

Network 18 bossman, Raghav Bahl, receives some loaded questions from Sunil Jain of the Financial Express, in an interaction with journalists of the The Indian Express group:

Sunil Jain: The SEBI chief [M. Damodaran] once spoke of  “anchor-investors”. Also, how do you justify your getting into private treaties?

Raghav Bahl: On “anchor-investors”, I never quite understood what Damodaran was saying. It is easy to accuse. I went to the SEBI chairman and said, “If there an iota of evidence, please give it to me in confidence. I assure you action will be taken.” But there was nothing. No evidence.

On paid news, a business journalist is under suspicion ab initio. This is what I have learnt in 20 years. Because when you say something is good, the first inference is that this guy is on the take. It is a cross that a business journalist carries. But I don’t think that is true.

At the end of the day, in my experience of 20 years, I don’t think anybody has ever produced anything tangible against any of our journalists. Errors, yes, they certainly happen. Do you get setup by somebody? Yes, you do. You can make a mistake but you correct it quickly.

Coming to private treaties, we did treaties of the value of Rs 30 to 40 crore. That’s all we did. We believe commercially, it is a loss-making model. Because 45 per cent of your non-cash revenues are out of your pocket on Day 1–in service tax and income tax. So we believe it is a loss-making model. We stopped it.

Sunil Jain: What about the ethics of it?

Raghav Bahl: Ethics can be compromised even without a treaties deal. Why will you do a treaty to compromise ethics? If you need to compromise ethics, why will you take your money in cheque, backed by 10 pages of an agreement? So I do not buy the ethics point at all. It’s a revenue earning mechanism, but is an extremely inefficient mechanism. I think it is a legitimate use of your editorial position.

Sunil Jain: How do you justify CNBC walking out of interviews if another channel gets them first?

Raghav Bahl: I think it’s a legitimate use of your editorial position. Don’t you do it? If the prime minister is giving you an appointment, won’t you want it first? It is a legitimate effort by a journalist to get it first.

Also read: What Raghav Bahl could learn from Samir Jain

Business journalism or business of journalism?

Is ethical journalism is a bad word at CNBC-TV18?

MTV isn’t the only channel making a bakra out of you

The media and the stock market collapse

Pyramid Saimira, Tatva & Times Private Treaties

24 April 2009

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SHARANYA KANVILKAR writes from Bombay: A nice little question mark hangs over Times Private Treaties, the controversial investment arm of The Times of India group, after India’s stock market regular yesterday barred 230 persons/entities from dealing in the securities market following their “prima facie” involvement in a forgery scam involving Pyramid Saimira Theatre Limited, an entertainment company which owns movie halls.

Pyramid Saimira is a Times Private Treaty (TPT) client—and one of the 230 persons/entities barred is Rajesh Unnikrishnan, an assistant editor of The Economic Times, the business daily published by The Times group.

Those debarred, including the two promoters of the company, were allegedly involved in forging a letter in December last year and passing it off as a letter from the Securities and Exchanges Board of India (SEBI) to manipulate Pyramid Saimira‘s stock, resulting in subtantial losses to investors.

The forged SEBI letter, asked one of the promoters P.S. Saminathan, chairman and managing director of Pyramid Saimira, to make an open offer for an additional 20 per cent stake at a price not less than Rs 250 at a time when the company was quoting around a fourth of that price.

The other promoter Nirmal Kotecha had sold over 15 lakh shares on Monday, December 22, the day some newspapers published a story based on the forged letter.

The Economic Times‘ Unnikrishnan, according to the SEBI order, played a key role  “played a key role in the forgery, dissemination of information and misleading the media to believe its authenticity”, along with Rakesh Sharma, then an executive with the PR firm, Adfactors, who helped circulate the forged SEBI letter to three of his friends in the media.

In 2008, Adfactors and The Times of India group together floated a public relations firm called Tatva, a 67:33 joint venture between the PR firm and the newspaper.

According to SEBI, Rakesh Sharma of Adfactors and Rajesh Unnikrishnan of ET were colleagues at Business Standard.

“These persons/entities prima facie have been found to have played a key role in the forgery, dissemination of the information contained in the forged Sebi letter to the media and misleading the media to believe the authenticity of the information that was circulated to them. They also derived illegal profits,” SEBI said in its 54-page order.

According to the Sebi order, the tower location of the mobile telephones used by Sharma, Kotecha and Unnikrishnan indicated the three met on December 20, around the time when the forged letter was circulated to the media.

Sharma, whose service was terminated by Adfactors on December 23, had in a statement to SEBI which he later retracted, also admitted that Unnikrishnan and he went to Kotecha’s residence to mail the forged letter to “media friends.”

Asked for a comment by Indian Express (which owns Financial Express where Rajesh Unnikrishnan worked earlier), on the involvement of a staffer in the scam, Rahul Joshi, executive editor of The Economic Times, said:

“We have seen the order. We are studying it.”

In an article on the ethics of the private treaties, India’s most famous business investigative journalist Sucheta Dalal, a former Times employee, had quoted from a 2007 letter from Rahul Joshi to his colleagues:

“At ET, we are carving out a separate team to look into the needs of Private Treaty clients. Every large centre will have a senior editorial person to interface with Treaty clients. In turn, the senior edit person will be responsible, along with the existing team, for edit delivery. This team will have regional champions along with one or two reporters for help—but more importantly, they will liaise with REs (Resident Editors) and help in integrating the content into the different sections of the paper. In this way, we will be able to incorporate PT into the editorial mainstream, rather than it looking like a series of press releases appearing in vanilla form in the paper.”

The Private Treaties, in which The Times Group picks up stakes in up and coming companies in return for guaranteed advertising and editorial exposure, has been a contentious affair in the company, and contributed to rumours surrounding the resignation of The Times of India‘s then executive editor Jaideep Bose aka JoJo last April.

The Economic Times carried an ET bureau report of the debarment of Rajesh Unnikrishnan, calling him an “employee” of ET but without referring to his editorial duties.

There was no mention of the scandal in The Times of India.

The Times group’s main competitor in Bombay, DNA, played a key role in unearthing the scam, with DNA Money special correspondent N. Sundaresha Subramanian churning out story after story.

Photo montage: courtesy DNA

Also read: Business journalism or the journalism of business?

Salil Tripathi: The first casualty of a cosy deal is credibility

Supreme Court notice toCNBC-TV18 analyst

Sushma Ramachandran: Corruption in business journalism

Will you buy a second-hand stock from this man?

2 April 2008

India’s Supreme Court has issued a notice to CNBC-TV18 financial analyst Mathew Easow, and asked him to disclose his contract with the TV channel after the stock market regular found him advising viewers to buy stocks which his associate companies were selling in the market. The court has also stayed an appellate tribunal’s order overturning the ban.

In April 2006, Easow—“a well-known chartered accountant with 18 years experience in the capital and financial markets”—had been directed by the Securities Exchange Board of India (SEBI) to “cease and desist” from recommending any investment in the public media, after finding him guilty of violating regulation 4(2)(f) of the SEBI (prohibition of fraudulent and unfair trade practices relating to securities market) regulation.

Easow successfully appealed against the SEBI order with the Securities Appellate Tribunal which imposed a penalty on the market regular. Challenging the SAT order, SEBI said the tribunal had failed to appreciate that Easow had recommended “a very impressive price appreciation in certain scrips” (between June and December 2005) within a short term, while he himself had sold those very shares on the same day.

Easow had sent six e-mails to TV 18 giving stock advice with buy and sell recommendations regarding four listed companies. The advice had also appeared on the channel’s website moneycontrol.com

While enquiring into the trading pattern of Easow, SEBI found that he had taken an opposite trading pattern to what had been recommended to the investors. “It is axiomatic that a person who recommends others to buy securities must himself be either passive or buy such securities rather than sell them,” the SEBI petition said. “The only circumstance when a person would sell securities after telling lay investors to buy would be a person who is taking advantage of his misleading information in the first place by giving stock tips, thereby inflating the price of the stock and then offloading such securities after the recommendation is aired,” it added.

Photograph: courtesy moneycontrol.com

Also read: Ethical journalism is a bad word at CNBC-TV18

Business journalism or business of journalism?

SUCHETA DALAL: Invest on his recommendations at your own risk

Business journalism or the journalism of business?

17 February 2008

The quality of Indian journalism has been under question for as long as Indian journalism has been around, especially by those who found the news and views contrary to their own closely-held beliefs, assumptions and ideologies.

Quibbles like the agendas of publishers and editors; the bias and prejudice of journalists; the unethical trade and professional practices; the growth of monopolies, have been around for ages. In recent times they have been joined by complaints of corruption, commodification, dumbing down, trivialisation, and celebrity culture. At the end of the day, though, there was little that the reader/viewer/listener lost in material terms from such news and views.

But what when she does?

As the stock market culture has taken root, the business channels on television have become the primary source of information, advice and guidance for investors. But how much of what they put out as “expert opinion” is the result of adequate inhouse research, and how much of it is hype and advertising? And how can we be sure that the channels, anchors and reporters are not susceptible to “market pressures”, to put it mildly?

The outgoing chairman of the Securities Exchange Board of India (SEBI) M. Damodaran has spoken with characteristic candour in an interview with Shekhar Gupta of the Indian Express for NDTV’s Walk the Talk. Presumably referring to the debacle of the Anil Ambani-promoted Reliance Power IPO, Damodaran said he had received a copy of a letter from an aggrieved investor on his penultimate day in office:

“In a letter sent to a TV person along with a few media houses and a copy endorsed to me, the investor asked, ‘I saw you guys saying everything was good about a particular issue till it listed below the issue price. And now I find you saying everything is wrong and talking it down. What happened to you guys?’

“I think there’s considerable merit in it (the letter)…. How is it that suddenly on listing, all the virtues that you thought resided in some particular issue disappeared? I think the media has a very large role to play and I am afraid that that role is not being played to the best of its ability�”

Business channels, anchors and reporters can go wrong with stocks, shares and companies, just like news channels, anchors and reporters can go wrong with elections, opinion polls, exit polls. It cannot be the rule, of course, but it is a occupational hazard. But with business journalism, the news consumer puts his hard-earned money on the line. Surely, he is entitled to receive news and views unsullied by corporate or personal motives and motivations?

Rumours of business channels having conflicts of interest, and rumours of business anchors and “experts” playing the market with insider information, and “talking up” or “talking down” the market, have been in the air for nearly five years now. On the overcrowded business TV screens, the distinction between news and advertising has all but disappeared. But Damodaran is the first to point this all out in so many words.

“When we heard the term anchor-investors first, I thought an anchor investor was the guy that brings in a lot of money initially into a project around whose reputation others invest. I am beginning to believe at the end of my three-year tenure that an anchor investor is one who is an anchor and an investor put together. I am worried that (they are) those who are responsible… who take the message to a billion plus people who will hopefully, one day be interested in the market. If that message gets distorted, what happens?

“There are people who make statements that are very clear indications of talking up or talking down stocks. And what do we have by way of investor protection? A disclosure that says, is this person having a position in that stock? Earlier, we had statements like “not really”, “maybe”, “it’s likely that my clients have”. Today, you get a broad spectrum such as “It is entirely possible that I have this.”

“Is this disclosure? It is clearly not. I would want to know before someone gives me advice whether you are giving me that advice because you will benefit. Current disclosures are far too routine. In fact, people have been saying things like “We are running out of time, can you make the disclosure to us. Disclosure is complete if you make it to the right audience, not to a television anchor. It is to the investor who is going to put his money. Filing disclosures is not good enough.”

Obviously, with million making decisions on the basis of the business channels, there is a need for a code of conduct. Damodaran says both his predecessors made moves in that direction. The first time, SEBI was told that the channels would draft one themselves, but there was no motion. The second time, SEBI said it would come up with a code, but there were no takers. Damodaran says SEBI has also tried to individually engage people, but he says a lot more needs to be done.

Also read: Ethical journalism is a bad word at CNBC-TV18

MTV isn’t the only channel making a bakra out of you

The media and the stock market collapse

Cross-posted on churumuri

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