SEBI issues show-cause notice to Brightcom Group, four others on alleged fraud
SEBI order on Brightcom Group: The Securities and Exchange Board of India (SEBI) on April 13 (Thursday) issued a show-cause notice-cum-interim order against Brightcom Group and four others on alleged fraud in the company’s financial statements.
SEBI order on Brightcom Group: The Securities and Exchange Board of India (SEBI) on April 13 (Thursday) issued a show-cause notice-cum-interim order against Brightcom Group and four others on alleged fraud in the company’s financial statements.
The name of the entity included M. Suresh Kumar Reddy, Vijay Kancharla, Yerradoddi Ramesh Reddy and Y. Srinivasa Rao. Besides, SEBI has barred these individuals from selling, disposing off, or diluting their shareholding in the company, directly or indirectly.
SEBI in its 77-page order slammed the Hyderabad-headquartered ad tech company stating that it has attempted to camouflage accounting entries during the investigating period of 2014-15 and 2019-20.
SEBI said, "The scale of fraud is indeed large. The company attempted to camouflage accounting entries in excess of Rs1,280 crore during 2018-19 and 2019-20 to give a distorted picture of its financial position."
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The regulatory watchdog found a number of discrepancies in the books of accounts as well as other information pertaining to the company’s foreign subsidiaries.
The same mostly pertained to assets impaired in FY20 to the tune of Rs 868.30 crore.
SEBI said, “By all yardsticks, the accounting shenanigans and dubious accounting practices, which the noticees resorted to, was to mislead investors.”
SEBI's investigation revealed that assets recorded in books of accounts were partially impaired. However, the time when these assets were recognised initially and the period for which they continued to be recognised could not be ascertained.
While directing the company to appoint one independent director, SEBI has asked stock exchanges to monitor the compliances vis-a-vis the directions given by the regulator.
SEBI stated that the noticees may ask for a personal appearance or may give a reply or raise objections to the points made in 21 days.
SEBI has directed the company to ensure they are in compliance with all the applicable accounting standards to undertake an examination of its consolidated financial statements (period 2014-15 to 2021-22).
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