SEBI bars Brightcom promoters for five years, slaps ₹30 cr penalty

The Securities and Exchange Board of India (SEBI) on Thursday passed a final order against the Brightcom Group, barring five entities including the company from accessing the securities market. Former chairman and managing director, M Suresh Kumar Reddy, and whole-time director Vijay Kancharla, both promoters, were barred for five years and slapped a penalty of ₹15 crore each.

The company has been directed to file a statement of impact of all the non-compliances during the investigation period. The regulator also noted that no computation of actual illegal gains has been made owing to the non-cooperation of the company.

SEBI had passed an interim order against the company and its promoters/directors alleging misstatements and accounting irregularities in its financial statements for financial years 2014-15 to 2019-20. The order said that the accounting irregularities and other disclosure violations were part of a scheme to defraud investors which enabled promoters to offload their shares at elevated prices.

The misrepresented financial statements with inflated profits, along with disclosure violations led to investors not having the true, fair and timely assessment of the financial position of the company, the regulator observed.

“Permitting this situation to continue would harm the interest of the investors. Considering the long period during which the misstatements continued and the persistent non-cooperation with SEBI’s investigation and the multifarious violations of law perpetrated by the noticees, I am of the view that stringent remedial and penal directions are warranted in this case,” whole-time member Ananth Narayan said.