Sebi Bans Rajesh Mehta from Trading in Rajesh Exports Securities

Shares of jewellery exporter Rajesh Exports Ltd came under heavy selling pressure on Thursday, slipping 5% and hitting the lower circuit after the Securities and Exchange Board of India (Sebi) prohibited the company's promoter and Chief Executive Officer, Rajesh Mehta, from trading in the firm's securities. The regulator cited alleged large-scale irregularities in financial reporting and diversion of company funds. On the BSE, the stock fell 4.99% to Rs 104.65, reaching its daily lower limit. A similar trend was seen on the NSE, where the share price declined 4.99% to Rs 103.92, also locking into the lower circuit. In addition to the restrictions imposed on Mehta, Sebi instructed the company to ensure accurate and transparent disclosures relating to its financial statements, related-party dealings, and other reporting requirements mandated under the Listing Obligations and Disclosure Requirements (LODR) framework. In its 109-page interim order issued on Wednesday, the market regulator stated that its investigation had uncovered apparent misstatements in the company's financial accounts. It also pointed to instances where funds were allegedly routed through personal bank accounts and related entities using layered transactions, without sufficient disclosures or documentary support. According to Sebi, Rajesh Exports was repeatedly served notices and provided multiple opportunities to submit genuine financial records, along with complete details explaining the purpose of the transactions, utilisation of funds, underlying business rationale, and the identities of the ultimate beneficiaries. However, the responses received were found to be inadequate. The market regulator also highlighted a lack of cooperation from Rajesh Exports Ltd's statutory auditors. The order noted that while the auditors had assured Sebi during their deposition that they would furnish the relevant audit working papers, those documents were ultimately not submitted. Sebi stated that the continued failure to cooperate with the investigation pointed towards an apparent effort to withhold significant information and impede the regulatory process. Among the preliminary irregularities identified during the investigation, the regulator said the apparent overstatement of nearly 97-99% of the company's reported revenue was exceptionally serious and unlike anything ordinarily encountered. The order further noted that Rajesh Mehta occupied the central decision-making role within Rajesh Exports and exercised considerable influence over the company's daily operations, financial management, and the functioning of its subsidiaries. In view of these findings, Sebi directed that Rajesh Mehta be prohibited from purchasing, selling, or otherwise dealing in the securities of Rajesh Exports, whether directly or indirectly, until further orders are issued.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.)