SEBI’s investigation into Zee promoters reveals more problems

After two years of negotiations, Sony Pictures called off the $10- billion merger deal with Zee Entertainment. As a result, the stock is seeing 25% fall. However, this may not be the end of woes for Zee and it’s promoters.

Sources informed CNBC-TV18 that there could be another negative surprise coming from Securities Exchange Board of India (SEBI).

"SEBI is in the final stages of its investigation against Punit Goenka and Subhash Chandra Goenka and their role at Zee," sources said.

SEBI has been investigating charges around fund siphoning and window dressing of books of accounts which allegedly benefited the promoter family of Zee Entertainment.

As per sources, the market regulator can complete its investigation and release its orders in the next 2-3 months.

Show-cause notices will follow the completion of these investigations.

Notably, SEBI had informed the Securities Appellate Tribunal (SAT) in October 2023 that it would take 8 months to complete its investigation against Punit Goenka and Subhash Chandra Goenka.

SAT had asked the promoters of Zee Entertainment to co-operate with market regulator in its investigation.

Sources aware of the development informed that the market regulator has established Punit Goenka’s role in siphoning off funds as Key Managerial Personnel (KMP) in various Essel entities.

As per sources, in the first phase of its investigation, SEBI found misuse of funds to the tune of ₹200 crore from Zee Entertainment, benefiting the promoter family. However, now, according to sources, the size of the violation has escalated to around ₹800-₹1,000 crore.

As part of its final order, SEBI could consider imposing a monetary penalty on Punit Goenka and Subhash Chandra Goenka.

Additionally, the market regulator might uphold its previous order of restraining Punit Goenka and Subhash Chandra Goenka from taking positions as a director or KMP at any listed entity.

CNBC-TV18 has reached out to Zee Entertainment and SEBI for a comment. Zee Entertainment declined to comment on the development, and a response from SEBI is still awaited.