SEBI's Crackdown on Financial Malpractices

In a significant move against corporate fraud, the Securities and Exchange Board of India (SEBI) has imposed a hefty penalty of Rs 58.5 crore on four top executives of Seya Industries Ltd. This action comes after uncovering a scheme involving the siphoning off of funds and the falsification of financial statements over several years.

The Details of the Fraud

SEBI's investigation revealed that Seya Industries diverted Rs 81.26 crore to companies linked to the promoter family, under the guise of sales and purchases or through undisclosed fund transfers during FY19, FY20, and FY21. These transactions were not reported as related party transactions, violating multiple regulatory norms.

Penalties and Consequences

The regulator has levied fines of Rs 28 crore each on Ashok Ghanshyamdas Rajani, the Chairman and Managing Director, and Amrit Rajani, the CFO. Additionally, Executive Directors Asit Kumar Bhowmik and Sivaprasada Rao Buddi have been fined Rs 2 crore and Rs 50 lakh, respectively. All four individuals have been barred from accessing the securities markets and holding director or key managerial positions in any listed company for five years.

SEBI's Stance

SEBI has emphasized the importance of compliance and accurate financial reporting to maintain investor trust in the securities market. The regulator has also directed Amrit Rajani to ensure the return of the siphoned funds to Seya Industries within six months, along with 12% annual interest.