'Is this the biggest stock market scam ever? Move over, Harshad Mehta ...' — asks Sanjay Jha

Amid ongoing regulatory scrutiny of jewellery maker Rajesh Exports Ltd, former Congress leader Sanjay Jha on Thursday took to social media platform X (formerly Twitter) and accused the company of allegedly faking revenue worth $158 billion (Rs 15.5 lakh crore).

"IS THIS THE BIGGEST STOCK MARKET SCAM EVER??? MOVE OVER, HARSHAD MEHTA. Rajesh Exports, according to Reuters, faked revenue of USD 158 billion (Rs 15.5 lakh crore). It did not exist. And no one knew, including Sebi, for five years. My head is spinning. Yours? And reportedly LIC invested in this fraud. How????? It is a listed company. Whoa! It is a developing story. Do listen in. Share. #NoTelePrompter," Jha wrote, while sharing a video post.

Separately, the Securities and Exchange Board of India (Sebi) issued an interim order alleging that the company misrepresented a significant portion of its revenue over a five-year period and diverted company funds without the requisite approvals and disclosures.

In its interim order, Sebi barred Rajesh Exports and its founder and Executive Chairman Rajesh Mehta from accessing the securities market until the completion of its investigation.

According to Sebi, around 97–99 per cent of Rajesh Exports' consolidated revenue originated from its overseas subsidiaries, particularly Switzerland-based Valcambi SA. However, the regulator alleged that the company did not consistently disclose the financial statements of its subsidiaries in the public domain.

Sebi noted that while Valcambi SA was presented as the group's principal operating entity, its audited standalone financial statements reflected negligible revenues.

Based on its findings, Sebi alleged that Rajesh Exports misrepresented approximately Rs 15.15 lakh crore, or 99.80 per cent of the revenues generated by its subsidiaries between FY21 and FY25.

The regulator also flagged transactions involving Affluence Shares and Stocks Pvt Ltd. According to the order, Rajesh Exports reported sales of Rs 11,487 crore and purchases of Rs 11,488 crore with Affluence.

However, Affluence reportedly denied carrying out any such transactions.

Sebi alleged that these were non-genuine accounting entries linked to Mehta's personal derivatives trading activities and were used to inflate turnover without any underlying economic substance.

The regulator further alleged that Rajesh Exports routed Rs 338.90 crore of company funds to accounts linked to Mehta, including for his personal derivative trades, without obtaining board or audit committee approvals and without making proper related-party disclosures.

According to Sebi, the alleged misrepresentation of financial statements and diversion of funds resulted in wealth erosion of Rs 12,725.53 crore for the company's shareholders, including retail investors.

Responding to the interim order, Rajesh Exports said, "The order is interim and there has been no any adverse conclusion on any aspect arrived by Sebi. The revenues declared by the company are correct and there is no over stating of revenues. There seems to be some type of communication gap and confusion between Sebi and the company. The company is in the process of clarifying all aspects to Sebi by submitting all the required and relevant documents."

It added, "The company is confident that Sebi in its wisdom will clarify the situation and arrive at the correct conclusion based on the authenticated documents which are in the process of submission by the company."

Rajesh Exports further said, "The company rejects all adverse media reports appearing with regard to the interim order of Sebi. The company will be shortly issuing a media clarification which would clarify and settle the unnecessary speculation in the media."

Meanwhile, shares of Rajesh Exports fell 5 per cent to close at Rs 104.65 on Thursday. At this level, the stock has declined 44.63 per cent over the past six months.