The Securities and Exchange Board of India (Sebi) on Tuesday passed an interim order barring Brightcom Group (BGL) chairman and CEO Suresh Kumar Reddy and chief financial officer Narayan Raju from holding key managerial positions in any firm. Reddy has been barred from the securities markets for a year.
It has also barred GQuant founder Shankar Sharma, along with Raju, from selling any shares held in BGL.
During the fourth instance, 15 million warrants were allotted to Sharma at Rs 37.77 per warrant, which were converted to equity shares in March 2022 and listed on the exchanges in April 2022.
Responding to Sebi’s order GQuant founder Shankar Sharma said, ” We have received the reconciled remittance data from the company yesterday, matched with our records, and are submitting the required information tonight itself to Sebi . We have paid a total of `56.65 crore towards our 15 million at a price of Rs 37.7 per warrant (Sebi formula price), which is the exact amount payable by us.”
In the case of 22 other allottees who were allotted shares worth `245.24 crore, the firm received just `52.51 crore, with `192.73 crore was either not received by the company or was routed back to the allottees through multiple layering of transactions.
The market regulator had received complaints pertaining to the preferential issue of shares to entities connected directly or indirectly to Brightcom, and lending of the money raised in the preferential issues as loans and advances to its subsidiaries.
“It was further alleged that proper disclosures were not made in the annual report of the company in respect of utilisation of the proceeds of the preferential issues,” said the interim order.
Sebi has directed the company to ensure that statutory auditors P Murali & Co as well as its predecessor PCN & Associates, or any of their former partners, are not engaged with the company till further notice, alleging that they helped the firm cover up for its fraudulent practices.
According to the interim order, Reddy and Raju submitted fabricated bank account statements to the regulator to show they did not receive any part of the proceeds.
Sebi passed the interim order as it believed an urgent intervention was warranted after its findings showed that manipulations carried out by the company as well as the 24 other noticees as regards the preferential issue.
The noticees have 21 days to file their replies to the order.