Omaxe Chairman, MD & 3 Key Executives Barred from Markets for 2 Years, SEBI Slaps Rs47 Lakh Penalty for Financial Misstatement

Moneylife Digital Team 31 July 2024

Investor Interest

Securities and Exchange Board of India (SEBI) has imposed a two-year ban on real estate developer Omaxe Ltd (noticee 1) from New Delhi, its chairman Rohtas Goel (noticee 2), managing director (MD) Mohit Goel (noticee 3) and three other executives for misstatements or irregularities in the financial statements of Omaxe.

The Omaxe executives barred from the market are: Sudhangshu S Biswal (noticee 4), Arun Kumar Pandey (noticee 5) and Vimal Gupta (noticee 6).

SEBI has also prohibited these five individuals from holding any position as director or key managerial person (KMP) in any other listed company for two years.

In a 126-page order, G Ramar, chief general manager (CGM) of SEBI, says, "It is an admitted fact that the Omaxe misrepresented its financials and violated LODR Regulations and the Companies Act. I also note that in several instances, rules, regulations and accounting standards have also not been followed, all resulting in the violation of PFUTP Regulations. Further, the violations have occurred over a period of 10 financial years."

"I also note that Mr Goel was the chairman and managing director (CMD) of Omaxe at the time of the violation and remains to be one till date. I note that Mohit Goel is the son of Mr Goel and was the executive officer and whole time director (WTD) of Omaxe at the time of the violation and remains to be one till date. Subsequently, I note that, noticee no 4 to 7 were the WTD, chief financial officers (CFOs) and joint MD of Omaxe, respectively. Noticee no8 to 14 were the members of the audit committee and noticee no 15 and 16 were the compliance officers of Omaxe during the investigation period (IP) and they all were responsible for full, fair and accurate information regarding the company's financials, but they failed to do the needful."

SEBI received a complaint against Omaxe, alleging fraudulent transactions, fund diversion, misrepresentation of financial statements and inflated turnover. Due to the seriousness of these allegations, SEBI initiated further examination, including a forensic audit of Omaxe's affairs. The IP covers 1 April 2018 to 31 March 2021, i.e, (FY18-19, FY19-20 and FY20-21), with references to events outside this period as necessary.

Following the investigation, it was observed that Omaxe and its management knowingly reported false and manipulated financial statements to mislead investors into believing the company's financial performance was accurately represented. This manipulation induced investors to trade Omaxe scrip, intending to deceive them and maintain the scrip's price to benefit from their pledged shares, SEBI says.

The CGM of SEBI also mentioned that the noticees acted together in a fraudulent scheme to portray normal transactions for the company's benefit despite its losses, misleadingly presenting these activities as lending to maintain Omaxe's stock price for three years. “The fraud was not disclosed to Omaxe's shareholders, misleading them to stay invested or trade in its securities.”

Additionally, SEBI says the misrepresentation of Omaxe's books and accounts misled investors in the securities market and it is evident that the noticees and the company acted in connivance to misrepresent the company's accounts.

Omaxe is fined Rs7 lakh, while Rohtas Goel, Mohit Goel, Sudhangshu Biswal, Arun Kumar Pandey, and Vimal Gupta are each fined Rs6 lakh. Sunil Goel, Nishal Jain, Gurnam Singh, DK Kambale, Sudip Bandyopadhyay, Shruti Dvivedi Sodhi, Prem Singh Rana, Bhopinder Singh, Navin Jain, and Shubha Singh are each fined Rs1 lakh.

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