Synopsis
On March 26, SEBI confirmed actions against Bharat Global Developers Limited for fraudulent disclosures and preferential share allotments. The investigation revealed fabricated claims about orders from major companies, leading to severe restrictions on BGDL's trading activities.Key Takeaways
- SEBI confirmed actions against BGDL for fake disclosures.
- Investigation extended until June 30 for further scrutiny.
- Misleading claims about orders from major companies were found.
- Restrictions imposed on BGDL’s trading activities.
- Unlawful gains from preferential allotments are being confiscated.
Mumbai, March 26 (NationPress) The Securities and Exchange Board of India (SEBI) confirmed its actions against Bharat Global Developers Limited (BGDL) for issuing fraudulent disclosures, executing preferential share allotments, and other infractions.
The market regulator has prolonged its investigation period until June 30 for further examination. In December last year, SEBI had taken initial steps against BGDL, which have now been substantiated.
The investigation revealed that the company fabricated a deceptive portrayal of its operations in design, engineering, and construction to lure investors.
SEBI's preliminary inquiry uncovered that BGDL inaccurately asserted it had received orders from reputable firms, including a McCain Group entity, Reliance Industries Limited, UPL Limited, and Tata Group.
However, it was determined that the listed companies never issued such orders, and the names referenced by BGDL were concocted to mimic established entities.
The company specifically claimed orders from McCain India Agro Private, UPL Agro Private Limited, and Tata Agro & Consumer Products.
SEBI confirmed that no subsidiaries under McCain, UPL, or Tata Consumer Products Limited exist.
The market regulator reiterated its limitations on BGDL, barring the company from engaging in buying, selling, or participating in the securities market.
The company and its representatives are also prohibited from interacting with SEBI-registered intermediaries or publicly listed companies.
The investigation found that BGDL’s management had altered its leadership and sanctioned a preferential share allotment to 41 selected investors.
These measures were part of a broader scheme to manipulate stock values. SEBI’s findings indicated that these preferential allottees profited by offloading shares at artificially inflated prices, resulting in losses for retail investors.
Between November 1 and December 20, 2024, over 2 percent of BGDL’s shares were sold at manipulated prices, significantly affecting investors.
The count of public shareholders jumped from 10,129 in September to nearly 45,000 by December, although a small group of allottees controlled the majority of these shares.
SEBI had previously indicated in a temporary ruling that permitting BGDL shares to continue trading would jeopardize retail investors, as the company's stock price had no correlation with its actual business activities.
Along with affirming its restrictions, SEBI has now initiated measures to confiscate unlawful profits made by certain individuals who acquired company shares through preferential allotments earlier this year.
