Imagine you’re thinking of investing in a company. The first thing you’d probably check is the company’s financial health, right?
Now, what if that company’s annual report was full of manipulated data? Scary, right?
This is exactly what happened to the retail investors of Brightcom Group Limited, where even the CEO was involved in the scam.
What Happened?
Brightcom Group Limited, a digital marketing company that started in 2000 and got listed in the stock market in 2015, but later in the year got reported in SEBI SCORES through multiple complaints.
SEBI (Securities and Exchange Board of India) on receiving a huge number of complaints started digging. What they uncovered was a serious mess.
The CEO, Suresh Reddy, wanted to cash in on company shares but knew that selling them directly would impact the share price.
So, he opted for another way.
He issued shares to a third party, which passed them along to a fourth, fifth, sixth party, and so on, until the money eventually made its way back to him. It was basically money laundering, with the CEO issuing shares to companies that were secretly tied to Brightcom.
It Led to the Scam of ₹500 Crores
The value of all the shares issued totaled a whopping ₹870 crores, but only ₹300 crores showed up in the records.
That means ₹570 crores just vanished into thin air.
And that’s not all—1.5 crore shares were issued to a person named Shankar Sharma at ₹37 per share. The value of which should’ve been worth ₹56.66 crores.
But only ₹39.98 crores made it into the banking records, leaving another ₹16 crores unaccounted for.
What Did SEBI Do?
After getting all the details of the case, SEBI asked Brightcom for their bank statements, but just to be thorough, they also got the same statements directly from the banks.
And what they came across surprised them completely. The company’s statements didn’t match the bank’s records.
One of those instances was when the company claimed to have received ₹38.5 crores from Aradhana Commosales, but there was no trace of this money in the bank.
It wasn’t just one case. Four other companies—Aradhana Commosales, Sarita Commosales, Kalpana Commosales, and Shalini Sales LLP—were all involved in these dubious share transactions.
The company issued ₹51 crores shares to these companies at ₹10 per share on May 27, 2020 which got listed on exchange on July 24, 2020.
These companies were later promoted to “Promoter” status. That gave them a three-year lock-in period instead of the usual one year for non-promoters as per SEBI guidelines.
SEBI Published Interim Order on August 22, 2023
To stop the further consquences and protect retail investors, SEBI published an interim order. As per the order the CEO, Suresh Reddy, and the CFO, Narayan Raju were banned from holding top positions in listed companies.
Also, they were also prohibited from buying or selling shares.
Impact of Such Scams on Investors
Retail investors, who thought they were putting their money into a solid company, face huge losses by these manipulations.
SEBI’s intervention was crucial to stop the fraud and try to protect those who had invested in the company based on what turned out to be false information.
This case really highlights the importance of being careful and doing your homework before investing. Even with all the regulations in place, there’s always a risk of something shady going on behind the scenes.
