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Business News/ Markets / Stock Markets/  SEBI finds lapses in Brightcom's preferential issues of shares; top officials barred from holding directorial posts
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SEBI finds lapses in Brightcom's preferential issues of shares; top officials barred from holding directorial posts

SEBI has barred Suresh Kumar Reddy - the promoter-cum-chairman and managing director of Brightcom Group, along with chief financial officer Narayan Raju from holding directorial posts until further notice.

SEBI finds lapses in Brightcom's preferential issue of shares. (Photo: Mint)Premium
SEBI finds lapses in Brightcom's preferential issue of shares. (Photo: Mint)

Capital markets regulator Securities and Exchange Board of India (SEBI) said in an interim order on Tuesday, August 22, that it has found lapses in Brightcom Group Limited (BGL) preferential issue of shares. SEBI has barred Suresh Kumar Reddy - the promoter-cum-chairman and managing director of Brightcom Group, along with chief financial officer Narayan Raju from holding directorial posts until further notice.

Reddy and Raju have also been restrained from the securities market until further notice. Market veteran Shankar Sharma and 21 other individuals and entities have also been prohibited from disposing off shares of the company until further notice.

SEBI said that it found "manipulations" carried out by Brightcom in its preferential allotments, and restrained Reddy from buying, selling or dealing in securities. In the investigations, it was also found that the considerations received were minute against the shares allotted. A total of 82 entities have been allotted preferential shares.

The regulator noted that Brightcom claimed to have advanced loans to the tune of 824 crore to its subsidiaries but it only transferred 350.75 crore and the remaining amount appeared to have siphoned off.

‘’The prima facie observations and findings, clearly show the manipulations carried out by BGL and other noticees, in respect of BGL's preferential allotments, which inter alia involve fictitious receipts of share application money from allottees and siphoning of funds from BGL,'' said SEBI in its order.

‘’However, BGL has brazenly attempted to cover-up its misdeeds by submitting forged and fabricated bank statements to SEBI. The blatant acts of the company and other noticees raise serious concerns about the affairs of the Company and also raise doubts as to whether the financial statements prepared by the Company and various disclosures made on stock exchange platform or in annual reports in the past are correct or no,'' added SEBI.

The Hyderabad-based company was embroiled in various disputes with the market regulator in the past, including concerns over overstating profits in its financial documents.

In June, SEBI had levied fines totalling 40 lakh on Brightcom Group and its promoters for flouting regulatory norms. The regulator imposed a fine of 12 lakh on Geetha Kancharla, 6 lakh each on Vijay Kumar Kancharla HUF, Vijay Kumar Kancharla, Karta of HUF and M Suresh Kumar Reddy (Chairperson and MD) and 5 lakh each on S V Rajyalaxmi Reddy and Brightcom Group Ltd.

SEBI had conducted an examination in the matter of the media company to ascertain the violation of provisions of insider trading norms, if any, by certain entities while trading in the shares of the company from April 2020 to August 2021.

In its examination, the regulator found that Vijay Kumar Kancharla HUF, M Suresh Kumar Reddy, S V Rajyalaxmi Reddy and Geetha Kancharla traded in the scrip of BGL during April 2020 to August 2021.

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Published: 22 Aug 2023, 08:38 PM IST
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