The Shankar Sharma-backed Brightcom Group (BCG) witnessed its shares lock in on a 5% lower circuit for the 8th consecutive session since the Securities and Exchange Board of India (SEBI) issued an interim order against key personnel of the company. There are various reasons for the continuous fall in the price of the scrip. 

In SEBI’s interim order dated August 22, 2023, the market watchdog found lapses and manipulations in the preferential issue of the company. 

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

Additionally, the regulator has restrained Reddy, Raju, ace investor Shankar Sharma and 21 other individuals from offloading their shareholding in the company. Shankar Sharma held 2.30 crore equity shares or a 1.14% stake in the company as of June 30, 2023. 

The Enforcement Directorate (ED) on August 26 conducted searches at the residences of Brightcom Group’s CEO and CFO and the premises of the company’s auditor, P Murali Mohana Rao, in Hyderabad under the provisions of FEMA, 1999.

ED recovered and seized various incriminating documents, digital devices, unaccounted cash of Rs 3.30 crore and gold jewellery and bullion worth Rs 9.30 crore from the auditor’s residence during the search.

Further, BCG’s board announced in the meeting held on August 27 that Suresh Reddy and Narayan Raju have resigned from their respective positions.

Shares of BCG were locked in at a 5% lower circuit at Rs 16.15 at the beginning of market hours on the National Stock Exchange. The stock has fallen nearly 33.5% in just eight sessions since August 23, the day of the declaration of SEBI’s order by the company.