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Capital market regulator SEBI has found media and entertainment business group K Sera Sera Ltd, now known as KSS Ltd, guilty of defrauding Indian investors during the issuances of global depository receipts (GDR) in 2007 and 2009.

SEBI has imposed a penalty of Rs 12.1 crore on the company and Rs 1 crore each on Director Hussain Sattaf and Managing Director Rajesh Pavithran.

During the course of investigation, it was observed that KSS had come up with its GDR issues on two different occasions, first on March 30, 2007 and second on May 15, 2009. In this regard, it is observed that Pan Asia Advisors Ltd was the Book Running Lead Manager for both of these issues. Further, it was also observed that Arun Panchariya was the founder, director as well as 100 per cent shareholder of Pan Asia.

The order copy said that it is alleged in the Investigation Report (IR) that the complete process of GDR issuances by KSS was devised and structured by Panchariya in connivance with KSS to the detriment of the Indian investors wherein loans were arranged for the subscription of GDRs of KSS on both these occasions.

It is further alleged that Panchariya was Managing Director, 100 per cent shareholder and authorised signatory of Vintage, the company with which KSS signed a loan and pledge agreement for both its first and second GDR issue. Thereafter, using certain Foreign Institutional Investors (FIIs), he got the GDRs converted into underlying shares and sold them in the Indian securities market with the help of certain domestic entities connected to him.

As per the company's website, it is in the movie production and distribution business and has been associated with over 100 movies, including "Sarkar", "Golmaal", "Ab Tak Chhapan" and "Partner".

The SEBI order said that the investigation report has not quantified the profit made or the loss caused to general investors on account of the violations committed by KSS, Sattaf and Pavithran.

"Further, I note that the violation of KSS under Section 12A(a), (b), (c) of SEBI Act read with Regulations 3(b), (c), (d) and Regulations 4(2)(c), (f), (k) and (r) of PFUTP Regulations was a repeated violation as the same modus operandi was employed by KSS in the both GDR issues leading to defrauding Indian investors on two different occasions," Adjudicating Officer K. Saravanan said in the order.