Reddy is the promoter-cum-chairman and managing director of Brightcom Group, and Raju is the chief financial officer. Besides restraining the officials from holding directorial positions, the capital market watchdog has also barred them from the securities market until further notice.
Not only the officials but even market veteran Shankar Sharma and 21 other individuals and entities have been prohibited from disposing off shares of the company until further notice.
Sharma responded to the issue on his official X handle and said, “We have submitted all reqd reconciled remittance data to SEBI today, totalling to Rs.56.65 Cr for 1.5 Cr shares @ 37.7 RS= 56.65 Cr. Delay was because of bank reconciliation data pending from Co. We look forward to early closure of the matter”.
The second interim order passed on Tuesday follows the show cause notice-cum-interim order passed against the company and its directors for alleged major irregularities in the company’s financial statements.
The restraining order is following an investigation that revealed that the above-mentioned officials were involved in the round-tripping of the company’s funds to falsely portray receipt of proceeds through preferential allotment of shares.
“Brightcom Group has brazenly attempted to cover up its misdeeds by submitting forged and fabricated bank statements to Sebi,” Sebi Wholetime Member Ashwani Bhatia said in his interim order.The blatant acts of the company and the officials raise serious concerns about the affairs of the company and also raise doubts about the financial statements and various disclosures made to the public by the company.
The market regulator claims that the company submitted fabricated bank account statements in June, and both Reddy and Raju are responsible for the same as they remain in charge of the company affairs.
“There is a real apprehension that the noticees (Reddy and Raju), if allowed to continue to be at the helm of affairs, may make every effort to derail SEBI’s investigation to unravel the truth in this matter by further forging and fabricating records and misleading SEBI,” Bhatia said.
In October last year, Sebi received complaints pertaining to the funds raised by Brightcom Group through the 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.
As part of its investigation, SEBI independently sought the company’s bank account statements directly from the concerned banks to check the details of the proceeds received.
SEBI found mismatches in the entries in the statements provided by the banks and those given by the company.
Brightcom Group has allotted 1,50,00,000 warrants to Shankar Sharma, which was subsequently converted into shares in March 2022, at Rs.37.70 per share for a total consideration of Rs 56.65 crore.
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.