Sebi Restricts Brightcom Group's Chairman SK Reddy & CFO Narayan Raju
The Securities and Exchange Board of India (Sebi) has taken action against media firm Brightcom Group's chairman, SK Reddy, barring him from engaging in the securities market. Reddy is also prohibited from holding directorial positions in any listed company due to suspected irregularities. The chief financial officer, Narayan Raju, has similarly faced restrictions on holding key roles. Furthermore, a group of 21 individuals, including Shankar Sharma, has been prevented from selling their stakes in the company. The directive has been issued for Brightcom to officially communicate the cessation order to its board within a seven-day period.
Sebi's investigation uncovered that the received considerations for the allotted shares were disproportionately small. The allotment of preferential shares involved a total of 82 entities. The regulatory order highlighted that Brightcom had presented fraudulent bank account statements to Sebi with the deliberate aim of misleading the authorities. Discrepancies were evident between the credit entries from the bank and those submitted by the company.
Sebi's preliminary findings indicated that Brightcom had financed its preferential allotment through fund round-tripping. The manner in which the share application money was accounted for resulted in inflated accounting records. Some entities were exploited to violate the promoter-lock in period, and the funds generated from preferential issues were not used as per the officially declared objectives.
Sebi also observed that Brightcom claimed to have extended loans amounting to Rs 824 crore to its subsidiaries, yet only Rs 350.75 crore was transferred, raising concerns about potential misappropriation of the remaining funds.
Earlier in April, Sebi had issued an interim order against Brightcom and promoter Reddy due to alleged financial statement manipulation.
