Brightcom Group (BCG) shares hit the lower circuit at opening hours on Wednesday after the Securities and Exchange Board of India (SEBI) issued a second interim order against the company and its directors for alleged irregularities in the company’s financial statements.

BCG shares opened at Rs 23.10 on Wednesday, 4.94% lower than the previous closing price of Rs 24.30 on the National Stock Exchange (NSE). 

The interim order passed on August 22 follows the show cause notice-cum-interim order passed as part of the investigation into the company’s preferential allotment of shares. SEBI’s findings show lapses and manipulations in BCG’s preferential issue involving fictitious receipts of the share application money from allottees and siphoning of funds from BCG carried out by the company and 24 other Noticees. 

SEBI has prohibited promoter-cum-chairman and managing director of the group Suresh Kumar Reddy and BCG’s chief financial officer Narayan Raju from holding any key managerial positions in any listed company or its subsidiaries until further notice.

Additionally, the market watchdog has restrained Reddy, Raju and 22 other individuals, including market veteran Shankar Sharma, from the securities market until further orders.

According to SEBI, Brightcom Group issued share warrants on a preferential basis four times. It raised Rs 868 crore from 82 allottees, including 1.5 crore warrants to Sharma at Rs 37.77 apiece, totalling Rs 56.66 crore. The company received only Rs 39.98 crore, which also could not be verified.  

Sharma responded to the issue hours after the SEBI barred him from selling shares, saying that the parties involved had submitted all the required reconciled remittance data to the regulator. He wrote on X (formerly Twitter) that the delay was because of bank reconciliation data pending from the company. 

Further, the interim order asked the company to ensure that its statutory auditors, P Murali & Co and PCN & Associates, including their past and present partners, do not engage with BCG or its subsidiaries in any capacity or manner whatsoever.