The securities market regulator on Tuesday slapped a cumulative fine of Rs 40 lakh on Brightcom Group and its promoters for flouting insider trading regulations.
The regulator slapped a fine of Rs 6 lakh on M Suresh Kumar Reddy, chairperson and managing director of Brightcom Group Ltd., and Rs 5 lakh on the company. Fines were also levied on four other entities that were involved in insider trading.
Earlier, SEBI, in an interim order, barred the promoters of Brightcom Group from diluting their shareholding for an accounting fraud involving manipulation of the company's financial statements.
In its order on Tuesday, the regulator noted that from April 2022 to August 2021, violations of various provisions of the insider trading regulations occurred. The company and its promoters failed to disclose the trades made during the period, even when they breached the regulatory threshold of Rs 10 lakh. Further, it was found that the code of conduct formulated by the company did not meet the minimum standard for listed companies as mandated by the insider trading regulations.
The regulator also found the promoters engaged in trading during the trading window closure period. Evidence was also found of the promoters engaging in contra trading, a manipulative practise where an opposite trade is undertaken within six months of trading in the scrip.
In response to SEBI’s order, Brightcom Group has informed the exchanges that it’s consulting legal advisors to carefully evaluate the order and determine the appropriate steps. "This may include compliance with the directives provided," it said.
The penalty shall be remitted within 45 days of the order.
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