The company is also barred from dealing with the securities market until further orders.
The regulator has, however, modified its directive against chief financial officer Narayan Raju by restraining him from holding the position of a director or a key managerial person only in Brightcom Group and its subsidiaries.
Further, the regulator has revoked the order against market veteran Shankar Sharma that prohibited him from disposing of shares of the company.
In August last year, the capital market watchdog passed a second interim order against Reddy, Raju, Sharma and 21 other individuals for their alleged involvement in round-tripping of the company’s funds to falsely portray receipt of proceeds through preferential allotment of shares.
“What comes out very clearly is the fact that explanations provided by noticees have convinced SEBI to ask even more questions on the way BGL (Brightcom Group) was run and the manner in which it was operating as per the whims and fancies of an individual, i.e. Mr. Suresh Kumar Reddy,” Sebi said in its confirmatory order. It is apparent that the company had loose internal financial controls and its CMD was running the company as a private concern.“The CMD treated BGL as his private enterprise, disregarding the large number of public shareholders and their interests. There were no checks and balances within BGL of the manner in which financial transactions were recorded,” the regulator said.
Background
In October 2022, Sebi received complaints pertaining to the funds raised by Brightcom Group through a preferential issue of shares/warrants during the FY19-21 period.
Sebi alleged that Brightcom Group raised the money through preferential issue to entities that were directly or indirectly connected to it, and that the money raised was given as loans and advances to its subsidiaries.
It was further alleged that proper disclosures were not made in the annual report of the company with respect to the utilisation of the proceeds of the preferential issue.
Brightcom Group had issued warrants/shares on a preferential basis on four occasions and raised Rs 868 crore from a total of 82 allottees, which included Shankar Sharma.
Sebi found mismatches in the entries in the statements provided by the banks and those given by the company.
While the company claimed that it had received the total consideration of Rs 56.65 crore, the entries in the bank account did not match.
The confirmatory order could lead to a negative reaction on Dalal Street when trading resumes on Thursday. On Wednesday, the stock ended 2.2% down on the National Stock Exchange at Rs 17.60.
