Zee-Sebi: Caught in the promoter crossfire
When a promoter is accused of wrongdoing, the first casualty is often not the promoter’s wealth but shareholder value. A regulatory ban can shut a company out of the capital market, a governance scandal can hurt its valuation and alleged diversion of funds can leave public investors nursing losses, even when they had no role in the misconduct.
The recent Zee Entertainment case illustrates the dilemma. The Securities and Exchange Board of India (Sebi) barred Zee from accessing the securities market for two months and its promoters, Punit Goenka and Subhash Chandra, for a year each over the alleged unauthorised use of company property as collateral for promoter-linked loans.
