The Securities and Exchange Board of India (Sebi) has suspended trading in the shares of Bharat Global Developers Ltd. (BGDL) due to severe financial misrepresentation, misleading disclosures, and price manipulation. The market regulator has also taken strong action against the company’s top management and preferential allottees.
Sebi’s Actions Against Bharat Global Developers
Sebi’s action follows an investigation triggered by social media posts and a complaint filed on December 16, 2024. The investigation was prompted by a massive 105-fold surge in BGDL’s share price, from ₹16.14 in November 2023 to ₹1,702.95 in November 2024.
- Suspension of Trading: Sebi has suspended trading in BGDL shares until further notice.
- Barred Individuals: The company, its managing director, CEO, and directors, along with 18 preferential allottees, are barred from accessing the securities market.
- Frozen Profits: Sebi froze ₹271.6 crore in illegal profits made by preferential allottees through the sale of shares.
How the Price Manipulation Scheme Unfolded
Sebi found that BGDL had replaced its management, approved preferential share allotments, and issued false disclosures about business expansion and partnerships to inflate its share price artificially. The company portrayed itself as a successful entity with large contracts and technological expertise, although these claims were not true.
Additionally, BGDL’s financial statements showed a drastic improvement in revenue and expenses in FY24, despite having negligible assets and negative cash flows in prior periods. This raised suspicions of financial manipulation.
- Shareholder Surge: BGDL’s shareholders increased from 10,129 in September 2024 to 44,976 in December 2024. However, over 99% held less than 1% equity, while preferential allottees controlled the majority of shares.
- Bonus and Share Split: A bonus issue (8:10) and a share split (10:1) scheduled for December 26, 2024, would have further diluted ownership and boosted trading volumes.
Sebi’s Strong Message on Market Misrepresentation
Sebi’s Whole Time Member, Ashwani Bhatia, emphasized that BGDL’s misstatements regarding its business and financials were an attempt to artificially inflate its share price.
“In the garb of a compliant company, BGDL has created paper wealth, now with a market cap of over ₹12,000 crore, based on misrepresentation rather than genuine economic activity,” Bhatia stated.
Impact and Consequences
As per Sebi’s order, the company, its top management, and preferential allottees are prohibited from buying, selling, or dealing in securities until further orders. Moreover, BGDL’s compliance officer has been barred from associating with any registered intermediaries or listed companies.
Conclusion
Sebi’s swift action against Bharat Global Developers highlights its commitment to maintaining the integrity of the securities market. The suspension of trading and freezing of illegal profits sends a strong message about the consequences of financial fraud and market manipulation.
