The market regulator SEBI (Security and Exchange Board of India) rejected the settlement application of Zee Entertainment Enterprises CEO Punit Goenka. It released an adjudication order on Thursday, Jan 2, 2025, stating that a new SCN (Show-Cause Notice) will be issued. The regulator previously issued an SCN on July 6, 2022, to entities following allegations that they had ignored the provisions of the LODR (listing obligations and disclosure requirements) regulations. ZEE was accused of fund diversion, which resulted in this investigation. The new notice will include findings from the previous SCN and further investigation on Punit Goenka and the Essel Group Chairman, Subhash Chandra.
SEBI said, “Following the investigation, it has been decided to proceed against the notices under section 11B of the SEBI Act, 1992.”
Under the 2018 regulations, SEBI allowed any entity facing an investigation or about to face can apply for a settlement by paying a fee or complying with non-monetary terms. Following this, ZEEL filled out the settlement application. However, SEBI rejected the offer to further investigate the matter.
Goenka and ZEEL have been fighting SEBI since the allegation of fund diversion. After an appeal in the SAT (Securities Appellate Tribunal) temporarily halted the SEBI’s action, the matter is pending a final hearing.
SEBI’s investigation of the company scuttled the $ 10 billion merger between ZEE and Japan’s Sony’s India unit. The initial order pertains to a LOC (Letter of Comfort) granted to the tune of Rs 2,000 crore. However, SEBI already shared with SAT that more LOCs were under inspection.
