SEBI bans Omaxe, Chairman, MD, and others from securities market for two years

SEBI crackdown on Omaxe: The Securities and Exchange Board of India (SEBI) has imposed a two-year ban on real estate firm Omaxe, its Chairman Rohtas Goel, Managing Director Mohit Goel, and three other individuals due to irregularities in the company's financial statements.

The additional individuals barred from the securities market are Sudhangshu S. Biswal, Arun Kumar Pandey, and Vimal Gupta. Along with this ban, SEBI has prohibited these five individuals from holding any position as Director or Key Managerial Person in any other listed company for the same period.

In a comprehensive 126-page order, SEBI detailed the actions of these entities, stating they "acted in concert to execute a fraudulent scheme, misrepresenting financial transactions to benefit the company despite its losses." This included attempting to portray fraudulent activities as normal lending operations to artificially sustain Omaxe's stock price over a three-year period.

The company was found to have misrepresented its financial statements during the fiscal years 2018-19, 2019-20, and 2020-21. This misrepresentation involved inflating figures related to revenue, debtors, advances, and expenses. SEBI noted that these actions led to manipulation of the company's stock price, which directly or indirectly maintained the value of collateral held by the promoter against a loan.

The fraud was concealed from Omaxe’s shareholders, misleading them into remaining invested in the company’s shares or dealing in its securities. This misrepresentation also misled investors in the broader securities market.

SEBI has also imposed a total fine of Rs 47 lakh on 16 entities, including the six individuals involved. The fines range from Rs 1 lakh to Rs 7 lakh and must be paid within 45 days.

The order follows a complaint received by SEBI accusing Omaxe of conducting fraudulent transactions, diverting funds, inflating turnover, and other serious misconducts. SEBI subsequently initiated a detailed examination, including a forensic audit of Omaxe’s affairs, covering the period from April 1, 2018, to March 31, 2021.

(With PTI inputs.)