Sebi Bans Omaxe, Key Executives From Securities Market For 2 Years

The Securities and Exchange Board of India (SEBI) on Tuesday imposed a two-year ban on real estate firm Omaxe, its chairman Rohtas Goel, managing director Mohit Goel, and three other executives for irregularities in the company's financial statements.

In addition to Rohtas Goel and Mohit Goel, the individuals barred from the securities market are Sudhangshu S. Biswal, Arun Kumar Pandey, and Vimal Gupta. SEBI has also prohibited these five individuals from holding any position as Director or Key Managerial Person in any other listed company for two years.

SEBI's final order, spanning 126 pages, outlined that the involved parties had "acted in concert to execute a fraudulent scheme." The scheme was designed to portray normal business transactions benefiting the company, despite Omaxe experiencing losses. The fraudulent activities were masked as lending operations to maintain the company's stock price over three years.

The company was found to have misrepresented its financial statements during the fiscal years 2018-19, 2019-20, and 2020-21. The discrepancies involved several financial items, including revenue, debtors, advances, and expenses. SEBI noted that these manipulations directly or indirectly influenced the stock price to maintain the value of the collateral used by the promoters for loans.

Moreover, SEBI highlighted that the fraud was not disclosed to Omaxe's shareholders, misleading them into staying invested or dealing in the company's securities. The misrepresentation also deceived investors in the broader securities market.

In addition to the market ban, SEBI has levied fines totaling Rs 47 lakh on 16 entities, including the six aforementioned. The penalties, ranging from Rs 1 lakh to Rs 7 lakh, must be paid within 45 days.

The order follows a complaint received by SEBI against Omaxe, alleging fraudulent transactions, fund diversion, financial misrepresentation, and turnover inflation, among other malpractices.

SEBI's actions underscore its commitment to maintaining transparency and integrity in the securities market, ensuring that companies and their executives adhere to fair and ethical practices.