Sebi acts against auditor for false, misleading disclosures

In a nearly-decade old case, Sebi today barred auditor Shashi Bhushan from issuing any certificates required under the securities law after finding that his firm fraudulently certified financial statements of Ritesh Properties and Industries.
Bhushan, proprietor of Bhushan Aggarwal & Co, was found to have violated norms related to fraudulent trade practices.
Among others, there were fraudulent misrepresentation regarding the pooling of land and collaboration agreement with Ansal Township and Projects Ltd.
The regulator had probed the dealings of Ritesh Properties' scrip for the period from July 14, 2006 to May 20, 2008 as there was a steep jump in prices. It was found that huge revenue was recognised by the firm from the real estate projects announced even as they were not constructed during the relevant period.

Later, a report by an independent chartered accountant found that the auditor had fraudulently certified the annual report.
According to Sebi, correct accounting procedures and practices had not been followed in preparation of financial statements of the company.

Bhushan had falsely certified misleading annual accounts, "containing distorted information, which he did not believe to be true but certified knowing that the same when published would be relied upon by the investors to be true and fair and such certification was intended for the benefit the company and its promoters/directors in their alleged manipulation of price in the scrip of the company", it noted.

Passing the order, Sebi Whole Time Member Rajeev Kumar Agarwal said disclosure of true and fair information is crucial for inventor protection and to maintain and restore their confidence in the securities market.
"The false and misleading disclosures in financial statements as found in this case are not only detrimental to the interests of investors but also endanger integrity of the securities markets.
"This is also a fit case where Sebi needs to send a stern message to professionals who associate themselves with securities market so as to prevent them from indulging in such acts of omissions and commissions as found in this case," he noted.

The regulator has barred Bhushan for one year from "directly or indirectly, issuing any certificate required" under various securities laws with respect to listed companies and the intermediaries registered with Sebi.