Mumbai (Maharashtra) [India], December 23 : In a decisive move to protect investors, the Securities and Exchange Board of India (SEBI) on Monday has issued an interim order against Bharat Global Developers Ltd. (BGDL) following alarming findings of fraudulent activities.
The order, comes in response to a complaint received by SEBI on December 16 this year which highlighted suspicious financial disclosures and a staggering 105-fold increase in BGDL's share price, soaring from Rs 16.14 to Rs 1702.95 within a year.
SEBI said "Examination of complaints and reports in respect of BGDL revealed that the Company had five promoters holding 93,860 shares comprising 16.77 per centof total shareholding till June 2020. However, from the quarter ended September 2020, the Company disclosed NIL promoter shareholding and 100 per cent public shareholding".
SEBI's investigation revealed a systematic scheme involving the manipulation of share prices through false disclosures and misrepresentation of the company's financial health.
The company allegedly engaged in misleading practices, including the portrayal of non-existent business operations and partnerships with reputed firms, aimed at inducing unsuspecting investors. This culminated in a preferential allotment to select allottees, who profited by offloading shares at artificially inflated prices.
The SEBI order said "The financial statements of the Company also appeared to misrepresent the true state of affairs of the Company and its business. The financial statements revealed that till FY23, the Company had negligible revenue, expenses, fixed assets and cash flows. Suddenly, however, the financial results from QE March 2024 showed a steep spike in revenues and expenses".
The regulatory body emphasized the need for immediate action to prevent further harm to investors, citing the imminent risk of liquidation of shares and the siphoning of illegal gains by the preferential allottees.
SEBI's interim order suspends trading in BGDL shares and mandates the company and its directors to provide a comprehensive inventory of their assets and financial dealings.
By curbing the ongoing mischief and restoring investor confidence, SEBI aims to ensure that companies adhere to truthful disclosures and uphold good faith dealings in the market.
The investigation is set to continue, with a deadline for completion by March 31, 2025, as SEBI seeks to hold accountable those involved in this apparent fraud.
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