SEBI Prevents Two Brightcom Officials From Managerial Posts Until Further Order

SEBI prohibited 23 entities, including the four promoter group entities' from disposing of shares of BGL held by them, directly or indirectly until further order

The Securities and Exchange Board of India (SEBI) has restrained two Brightcom Group officials, M Suresh Kumar Reddy and Narayan Raju, from holding any managerial position in the company or its subsidiaries until further orders. According to PTI, Reddy is the promoter-cum-chairman and MD of Brightcom Group Ltd (BGL) while Raju is the chief financial officer. The regulator also banned Reddy from the securities market until further orders.

SEBI's whole-time member Ashwani Bhatia in the order said, "It is perhaps for the first time that the SEBI is resorting to issuing a second interim order for the same entity. This has been done with much thought and deliberation, considering the scale and gravity of manipulation." The capital markets watchdog also prohibited 23 entities, including the four promoter group entities' from disposing of shares of BGL held by them, directly or indirectly until further order.

The regulator also asked BGL to ensure that its statutory auditors, P Murali & Co and PCN & Associates, including their past and present partners, are not engaged with the company or its subsidiaries in any capacity until further order.

In its latest order, the SEBI said prima facie observations and findings clearly show the manipulations carried out by BGL and other noticees, in respect of the company's preferential allotments, which involve fictitious receipts of share application money from allottees and siphoning of funds from BGL. However, BGL has brazenly attempted to cover up its misdeeds by submitting forged and fabricated bank statements to the regulator.

According to the SEBI, the blatant acts of the company and other noticees raise serious concerns about the affairs of BGL and also raise doubts as to whether the financial statements prepared by the company and various disclosures made on the stock exchange or in annual reports in the past are correct or not.

The investigation has been able to probe only allotment made to 22 entities in the preferential issue, the order stated, and added that there is a possibility that the remaining 60 (of the total 82 allottees) may have received shared without any or partial payment. While a detailed probe is going on in this matter to unravel the extent of fraud committed, Brightcom Group and its KMPs during the relevant time have not cooperated in the investigation.

Moreover, BGL and its CMD have resorted to the submission of forged and fabricated bank account statements to mislead the regulator. The fabricated bank account statements have been submitted as late as June 2023, and Reddy and Raju as they remain in charge of the company's affairs.

Thus, there is a real apprehension that Suresh Reddy and Narayan Raju, if allowed to continue to be at the helm of affairs, may make every effort to derail the regulator's investigation to unravel the truth in this matter by further forging and fabricating records and misleading SEBI, the regulator said.