SEBI Levies Rs 55 Lakh On Securekloud's CFO, 5 Others

SEBI on Friday levied fines totalling Rs 55 lakh on Securekloud's CFO and five others for their alleged involvement in a fraudulent scheme of misrepresenting the financial statements of Securekloud Technologies Ltd (STL).

The regulator slapped fines in the range of Rs 5-20 lakh on S Ravi Chandran, Dinesh Raja Punniamurthy, Babita Singaram, Swasti Bhowmick, R Thyagrajan (CFO) and G Sri Vignesh.

The order came after SEBI received complaints alleging the financial misreporting/irregularities by promoters and management of STL and the resignation of its auditor Deloitte, wherein its forensic report cites various corporate governance issues including fraud have been committed in the firm.

Subsequently, the regulator had initiated an investigation in the affairs of the company for the period covering four financial years from April 2017 to March 2021.

The focus of the said investigation was broadly to investigate into the manner of alleged misstatement in the books of accounts of STL.

During the investigation, SEBI observed that after Deloitte's resignation STL appointed PKF Sridhar to conduct a forensic review of the books.

However, SEBI observed that STL stated, it disengaged PKF's services as they did not submitted the report on time.

Further, the company appointed another auditor which disagreed with most of the issues reported by Deloitte.

Thereafter, SEBI appointed Grant Thornton (GT) to conduct a detailed examination of the books of accounts of the firm and to conduct forensic audit of books of accounts of the company for FY 2017-18, FY 2018-19, FY 2019-20.

In its order, SEBI found Chandran being the whole-time director of STL was involved in day to day affairs of the company and thus was duty bound the initiation of forensic audit to exchanges.

However, he failed by not disclosing the initiation of forensic audit by SEBI to exchanges and has violated LODR (Listing Obligations and Disclosure Requirements) rules.

It also noted that the forensic audit report of GT and investigation of SEBI have unearthed a series of serious irregularities and violations in respect of the STL.

Despite the irregularities, Bhowmick and Thyagrajan have provided false CEO/CFO certificate in the annual reports of the company for FY2018-19 and 2019-20, thereby violating the disclosure norms, SEBI said.

As per the order, Punniamurthy and Singaram being members/chairman of the audit committee since beginning of the investigation, failed to carry out due diligence, acted like an agents of the company and also failed to exercise independent judgment as members of the audit committee of a listed company and thereby violated the norms.

Thyagrajan and Vignesh intentionally concealed facts and made misleading statement to SEBI that PKF’s services had been disengaged because it could not submitted the report within the stipulated time, it added.

Through such acts, Chandran, Punniamurthy, Singaram, Bhowmick, Thyagrajan and Vignesh flouted the regulatory norms.

Last year, SEBI in its order dated December 2022, imposed fines of Rs 10 crore on Securekloud's promoters and directors—Suresh Venkatachari, RS Ramani and Gurumurthi Jayaraman for misrepresenting the financials of STL.

Also, they were prohibited from by the regulator from from being associated as a director or key managerial personnel in a listed company or an intermediary from six months up to one year.