Sebi Imposes Ban on Onelife Capital Advisors and Promoters Over Alleged Fund Diversion

The Securities and Exchange Board of India (Sebi) has barred Onelife Capital Advisors and its promoters, Pandoo Naig and Prabhakara Naig, from participating in securities markets until further notice. This action follows allegations of fund diversion and financial misrepresentation. Additionally, the Naigs are prohibited from serving as directors or key managerial personnel in any listed company planning to raise public funds or any Sebi-registered intermediary.

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Sebi's interim order, issued on Monday, also serves as a show cause notice to Onelife Capital Advisors Ltd (OCAL) and the Naigs. They must explain why further restrictions should not be imposed on them. The company and its promoters are associated with Family Care Hospitals Ltd, which is listed on the Bombay Stock Exchange (BSE).

Financial Misrepresentation Allegations

According to Sebi, OCAL's financial statements reveal significant misrepresentation. The company allegedly inflated revenue and expense figures to present an overly positive image of its business operations. In reality, these figures were based on fictitious sales and purchases.

The regulator highlighted various regulatory violations by OCAL, including undisclosed transactions among related parties and fund diversions disguised as loans. These actions indicate failures in corporate governance.

Involvement of Internal and External Watchdogs

Sebi noted that the deceptive activities of Onelife Capital Advisors and its promoters went unchecked due to the tacit or explicit approval of internal and external watchdogs. These included compliance officers, audit committee members, and statutory auditors.

The regulator described the promoters' actions as a classic example of public shareholders being misled without consideration for potential consequences. Sebi has also asked OCAL, its promoters, and several individuals to justify why an inquiry should not be conducted against them for alleged violations of PFUTP rules and disclosure norms.

Investigation Triggered by Complaints

The order was prompted by a complaint received by Sebi in October 2022. The complaint alleged fund diversion and financial misrepresentation by Family Care Hospitals Ltd, formerly known as Scandent Imaging Ltd, and OCAL.

The National Stock Exchange (NSE) also examined OCAL based on internal alerts. Sebi's investigation aimed to determine if there were breaches of PFUTP norms and LODR rules during the period from April 2018 to March 2023.

This ongoing investigation underscores the importance of transparency and accountability in financial reporting within publicly listed companies. Sebi's actions reflect its commitment to safeguarding investor interests by addressing potential misconduct in the securities market.