SEBI Bars Omaxe Ltd. And Key Executives from Securities Market For Two Years; Imposes Rs 47 Lakh Fine For Financial Irregularities

SEBI has banned Omaxe Ltd., Chairman Rohtas Goel, Managing Director Mohit Goel, and executives Sudhangshu S. Biswal, Arun Kumar Pandey, and Vimal Gupta from participating in the securities market for a period of two years. This ban includes prohibitions on buying, selling, or dealing in securities in any manner. These individuals are also barred from holding any directorial or key managerial positions in other listed companies for the same duration.

SEBI has levied fines totaling Rs 47 lakh on 16 entities including the aforementioned individuals. The fines vary between Rs 1 lakh and Rs 7 lakh and must be paid within 45 days.

According to SEBI, the company engaged in fraudulent practices to manipulate its stock price and present a misleadingly positive financial position to investors. This misrepresentation spanned financial years FY19, FY20, and FY21.

Omaxe Ltd. overstated revenues and misrepresented its financial statements including items such as revenue, debtors, advances, and expenses. These distortions were to maintain the price of the company's stock despite ongoing financial losses. The company's actions involved portraying fraudulent transactions as routine lending activities to artificially sustain stock value.

The fraud was concealed from shareholders which misled them into investing in Omaxe shares and securities based on inaccurate information.

SEBI's investigation noted that there were significant violations of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations and other regulatory standards. Regulation 4(1) of the PFUTP Regulations prohibits manipulative, fraudulent, or unfair trade practices.

Regulation 3(b), 3(c), and 3(d) of the PFUTP Regulations prohibit any person from engaging in fraudulent and manipulative trade practices. Regulation 3(b) bars practices that create a false or misleading appearance of active trading. Regulation 3(c) forbids actions that manipulate or distort the market price of securities. Regulation 3(d) addresses the use of manipulative schemes that influence the price of securities.

Regulation 4(2)(k) of the PFUTP Regulations prohibits practices that lead to market manipulation and misleading of investors.

Regulation 4(2)(r) of the PFUTP Regulations includes provisions to prevent any action that creates a misleading appearance of market activity. The violations at Omaxe involved deceptive practices that misled investors and distorted the market perception of the company's financial stability.

Regulation 23(3) and 23(4) of the LODR Regulations require companies to disclose accurate and complete financial information to ensure transparency.

Regulation 33(1)(a) and 33(1)(c) of the LODR Regulations mandate accurate reporting of financial performance in quarterly and annual reports.

Regulation 34(3) of the LODR Regulations requires companies to ensure that their annual reports reflect true and fair financial positions.

Regulation 48 of the LODR Regulations addresses the responsibility of the company to comply with accounting standards and regulations.

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