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Last week, SEBI banned real estate company Omaxe, along with its Chairman Rohtas Goel, Managing Director Mohit Goel, and three others from the securities market for two years due to discrepancies in financial statements. The ban includes prohibitions on serving as directors or holding key managerial roles in any publicly traded company. Additionally, a fine of INR 47 lakh was imposed on 16 entities, with penalties ranging from INR 1 lakh to INR 7 lakh, payable within 45 days. SEBI's 126-page order revealed that the company engaged in fraudulent activities, misrepresenting financials to stabilise its stock price while misleading investors.
Last week, the Securities and Exchange Board of India (SEBI) banned a real estate company Omaxe, along with its Chairman Rohtas Goel and Managing Director Mohit Goel from the securities market for the next two years. This decision was due to discrepancies in the company's financial statements. Along with the Chairman and MD, three others were also barred from the securities market: Sudhangshu S. Biswal, Arun Kumar Pandey, and Vimal Gupta. Advertisement
The charges also prevent the individuals from serving as a Director or holding any important managerial role in any other publicly traded company for the next two years. In addition, the regulatory agency has imposed a total fine of INR 47 lakh on 16 entities, including these six. The penalties - ranging from INR 1,00,000 to INR 7,00,000 - must be paid within 45 days.
Over the last three financial years - 2018-19, 2019-20, and 2020-21 - the firm released falsified statements, by distorting revenue, debtors, advances, and expenses figures.
In a 126-page final order, Sebi detailed that these entities collaborated to carry out a fraudulent scheme. They attempted to make these fraudulent activities appear as regular business transactions that would benefit the company, even though the company was actually incurring losses. Additionally, they tried to disguise these actions as simple lending activities, all in an effort to keep the stock price of Omaxe stable for three years.
The company also misguided their investors by not divulging the fraud, thus compelling the investors to continue holding its shares or trading in its securities. The order also pointed out that the misrepresentation of Omaxe's books and accounts misled investors in the securities market.
SEBI has therefore prohibited six entities, including Omaxe, Rohtas Goel, Mohit Goel, and three others, from participating in the securities market. They are banned from buying, selling, or dealing in securities in any way, whether directly or indirectly, and from being involved with the securities market in any capacity for two years.
The order was issued after the SEBI received a complaint against Omaxe, accusing the company of engaging in fraudulent transactions, diverting or embezzlement of funds, misrepresenting financial statements, and inflating turnover, among other allegations.
Given the severity of the accusations, SEBI conducted further examinations which included a forensic audit of Omaxe's activities. The duration that the investigation covered was from April 1, 2018 to March 31, 2021, which spans three financial years - 2018-19, 20219-2020, and 2020-21.
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