The Securities and Exchange Board of India (SEBI) has imposed a two-year ban and financial penalties on real estate firm Omaxe Ltd., along with its Chairman Rohtas Goel, Managing Director Mohit Goel, and three other key executives, due to significant financial reporting irregularities.
Omaxe Ltd., Rohtas Goel, Mohit Goel, Sudhangshu S. Biswal, Arun Kumar Pandey, and Vimal Gupta are prohibited from participating in the securities market for two years. This restriction includes buying, selling, or dealing in securities and extends to holding directorial or key managerial positions in any other listed companies during this period.
SEBI has also imposed a total fine of ₹47 lakh on 16 entities, including the aforementioned individuals. The fines range from ₹1 lakh to ₹7 lakh and must be settled within 45 days.
The regulatory body found that Omaxe Ltd. engaged in fraudulent activities to manipulate its stock price and present a misleadingly positive financial outlook to investors. This misconduct, which occurred across financial years FY19, FY20, and FY21, involved overstating revenues and misrepresenting financial statements, including revenue, debtors, advances, and expenses. These distortions were aimed at sustaining the company’s stock price despite ongoing financial losses, with fraudulent transactions being portrayed as routine lending activities.
The fraud misled shareholders into investing in Omaxe shares and securities based on inaccurate information. SEBI’s investigation highlighted violations of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations and other regulatory standards. Specifically:
- Regulation 4(1) of PFUTP Regulations prohibits manipulative, fraudulent, or unfair trade practices.
- Regulations 3(b), 3(c), and 3(d) forbid creating a false or misleading appearance of active trading, manipulating or distorting market prices, and using manipulative schemes to influence security prices.
- Regulations 4(2)(k) and 4(2)(r) address market manipulation and misleading investor actions.
- Regulations 23(3) and 23(4) of the LODR Regulations require accurate and complete financial disclosures to ensure transparency.
- Regulations 33(1)(a) and 33(1)(c) mandate accurate reporting of financial performance in quarterly and annual reports.
- Regulation 34(3) requires annual reports to reflect a true and fair financial position.
- Regulation 48 outlines the company’s responsibility to adhere to accounting standards and regulations.
The violations at Omaxe Ltd. involved deceptive practices that distorted the market perception of the company’s financial stability, leading to SEBI’s stringent actions.
Posted and reproduced in Public Interest by
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