Two former Brightcom Group officials settle with Sebi in a financial reporting case

Two former officials of Brightcom Group have reached a settlement with market regulator Sebi after agreeing to pay settlement amounts and accept temporary restrictions on their association with the company. The case concerns alleged disclosure failures and irregularities in the company’s financial statements between FY15 and FY20.Sebi had initiated an investigation into Brightcom Group following complaints received between October 2020 and March 2021 about inaccuracies and irregularities in the company’s accounts. The investigation focused on a six-year period and investigated possible violations.

Following the investigation, a show-cause notice was issued in September 2024 to several persons, including compliance officer M Manohar and independent director M Vijaya Bhasker Reddy. Sebi alleged that Manohar failed to disclose the initiation of a forensic audit and ensure accurate disclosure to his shareholders during his tenure. As a member of the company’s audit committee, Reddy was accused of failing to ensure that the financial statements complied with accounting standards and gave a true and fair view of the company’s affairs.

Both applicants requested a settlement during the ongoing proceedings. After meetings with Sebi’s internal committee and recommendations from the high-powered advisory committee, the regulator approved the terms.

As per the settlement terms, each applicant will pay Rs 12.35 lakh. Manohar has also agreed to have no ties with Brightcom Group or its subsidiaries for a year, while Reddy faces a two-year ban. Sebi confirmed that the fines have been paid in full.

Sebi has terminated the proceedings initiated through the 2024 show-cause Notice. However, the order states that the regulator may reopen the enforcement action if any misrepresentation or violation of the settlement terms is discovered later. The settlement order takes effect immediately.