Brightcom CMD, CFO Resign Amid SEBI Crackdown, Shares Hit Multiple Lower Circuits

Shares of small cap IT Software sector company Brightcom Group Ltd hit lower circuit on Monday after reports of resignations of its Chairman and Managing Director (CMD) Suresh Reddy and Chief Financial Officer (CFO) Narayana Raju surfaced. Suresh Reddy and Narayana Raju resigned on August 27, according to the August 27, 2023 BSE filing of Brightcom Group. The CMD and CFO resigned following a crackdown by market regulator Securities and Exchange Board of India (SEBI).

It is worth noting that the board of directors of the company received and acknowledged resignation letters of Suresh Reddy and Narayana Raju on August 27.

According to the BSE filing of the Brightcom Group Ltd dated August 27, "Received and acknowledged resignation letters from Mr. Suresh Reddy, who was serving as the Chairman & Managing Director (CMD) of the company.

Received and acknowledged resignation letters from Mr. Narayana Raju, who held the position of Chief Financial Officer (CFO) of the company."

The company also issued yet another exchange filing on August 27 informing a Transition Leadership Team was proposed, with the responsibility of overseeing the leadership transition process. The Board also approved the commencement of a search for an CEO and an CFO to ensure the smooth continuation of essential operations.

The company also ensured to inform the company's staff about the upcoming leadership changes. "Transparent and clear communication will be maintained throughout this transition period to ensure minimal disruption to daily operations," said the exchange filing.

The Board acknowledged the need for regulatory compliance. Steps will be taken to engage with relevant regulatory bodies and ensure compliance with all applicable regulations during this transition period, said Brightcom Group.

Meanwhile, shares of Brightcom Group have taken a hit after the recent development. Brightcom Group stock hit back-to-back lower circuits in the last few days. Current market price of Brightcom Group stock is Rs 19.72 apiece with intraday fall of 4.96%. Brightcom Group has a market capitalisation of Rs 3,979.34 crore. The 52-week high price of Brightcom Group stock is Rs 45.85 apiece and 52-week low price is Rs 9.27 apiece, respectively. Brightcom Group stock fell 18% in last 1-week and another 18% in last 2-weeks. In last 3-months, Brightcom Group shares gained 22%. In last 1-year, Brightcom Group stock fell 56% and gained 347% in last 3-years.

Meanwhile, the Enforcement Directorate had conducted searches at several locations in Hyderabad connected with Brightcom Group. The residences of Reddy, Raju, office and residence of company's auditor P Murali Mohana Rao had been searched by ED as per provisions of the Foreign Exchange Management Act (FEMA), according to reports.

It is worth noting that the ED recovered and seized unaccounted cash of Rs 3.30 crore and gold jewellery and bullion worth Rs 9.30 crore from auditor P Murali Mohana Rao's residence.