 "SEBI")
The Securities and Exchange Board of India (Sebi) has barred media company Brightcom Group's chairman SK Reddy from dealing in the securities market and has also restricted him from holding director post in any listed company for alleged irregularities.
The market regulator has also restricted chief financial officer Narayan Raju from holding key positions while 21 others, including Shankar Sharma, have been barred from selling their stakes in the company. Brightcom has been directed to place the order of the cessation before its board within seven days.
The market regulator has also restricted chief financial officer Narayan Raju from holding key positions while 21 others, including Shankar Sharma, have been barred from selling their stakes in the company. Brightcom has been directed to place the order of the cessation before its board within seven days.
Sebi in its investigations has found that the considerations received were minute against the shares allotted. A total of 82 entities have been allotted preferential shares.
The order further notes that the company submitted forged and fabricated bank account statements to Sebi with a deliberate intent to mislead. This was reflected in the mismatch of credit entries directly obtained from the bank and those submitted by the company.
Sebi has prima facie observed that Brightcom itself financed its preferential allotment by round-tripping of funds and the accounting of receipt of share application money in a fictitious manner led to an inflated book of accounts. Further, some entities were used to flout promoter-lock in period and the proceeds of preferential issues were not utilised as per the declared objects.
Sebi noted that Brightcom claimed to have advanced loans to the tune of Rs 824 crore to its subsidiaries but it only transferred Rs 350.75 crore and the remaining amount appeared to have siphoned off.
Earlier in April, Sebi had issued an interim order against the company and promoter Reddy for alleged manipulation in financial statements.
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The regulator noted that it is the first time that they have issued a second interim order for the same company. “This has been done with much thought and deliberation, considering the scale and gravity of manipulation,” said Sebi whole-time member Ashwani Bhatia.
Sebi has noted that in its investigations it has found several accounting irregularities. As per the findings, Brightcom Group attempted to camouflage accounting entries in excess of Rs 1,280 crore during FY19 and FY20.
