Pyramid Saimira – Scam

Recently I read news about Pyramid Saimira, The Securities and Exchange Board of India (Sebi) has banned Pyramid Saimira Theatre Ltd (NSE: PSTL) from dealing in securities in any manner or accessing the capital market for a period of seven years in a case relating to cornering of employees’ quota shares in the company’s initial public offering (IPO).

The decision was made to keep market in orderly manner by banning this type of companies. Seven employees, which were not actual “employees” applied when company came with IPO in 2006. They applied for 4,22,200 shares under employee category which was subscribed only 0.015 times and booked unlawful profit of Rs 2.31 crore within 3-4 months of listing.

After 3 years SEBI surfaced this scam and banned the company.
My question is who is at loss here? Person who did the fraud and gained crores of rupees or Investors who invested in this company and still holding their shares which will be worthless in near future.

How can a normal trader or investor identify these types of scams, it’s SEBI or regulator’s job to strengthen their rules, audits and make sure that all the necessary steps are followed.

Let me know what you think…