FEMA violation case: ED raids Brightcom Group premises in Hyderabad

HYDERABAD: The Enforcement Directorate (ED) on Saturday said that it conducted searches at five locations including the residences of the Hyderabad-based digital marketing company Brightcom Group Ltd (BGL)’s Chief Executive Officer and Chief Financial Officer, and premises of the company’s auditor P Murali Mohana Rao. These searches were made in connection with a Foreign Exchange Management Act (FEMA) violation case.

In June 2023, market regulator Securities and Exchange Board of India (Sebi) levied a fine of Rs 40 lakh on Brightcom Group and its promoters for flouting regulatory norms. The regulator slapped a fine of Rs 12 lakh on Geetha Kancharla, Rs 6 lakh each on Vijay Kumar Kancharla Hindu Undivided Family (HUF), Vijay Kumar Kancharla, Karta of HUF, and M Suresh Kumar Reddy (Chairperson and MD), and Rs 5 lakh each on S V Rajyalaxmi Reddy and the BGL.

Sebi had conducted an examination in the matter of BGL to ascertain the violation of provisions of insider trading norms, if any, by certain entities while trading in the shares of the company from April 2020 to August 2021. In its examination, the regulator found that Vijay Kumar Kancharla HUF, M Suresh Kumar Reddy, S V Rajyalaxmi Reddy and Geetha Kancharla traded in the scrip of BGL from April 2020 to August 2021.

Recently, Sebi barred Brightcom Group's Chief Executive Officer M Suresh Kumar Reddy and Chief Financial Officer Narayan Raju from holding directorial positions over irregularities in the marketing firm's preferential share allotments.

SEBI said that it found "manipulations" carried out by Brightcom in its preferential allotments, and restrained Suresh Kumar Reddy from buying, selling, or dealing in securities.

Sebi on August 23, 2023, said that the Hyderabad-based digital marketing firm attempted to "cover up its misdeeds" by submitting forged and fabricated bank statements, which also raised doubts about the authenticity of the company's historical financial disclosures. However, the company said it was consulting legal experts and evaluating potential courses of action.