SEBI Brings Confirmatory Order Against Bharat Global Developers Ltd

The market regulator, the Securities and Exchange Board of India, on Wednesday brought out a confirmation order against Bharat Global Developers Ltd. for fake disclosures, preferential allotment of shares and other violations. However, the regulator has also extended its timeline for a deeper investigation into the company until June 30.

On Dec 23 last year, the regulator came out with a chain of direction against the company, which now stands confirmed.

SEBI had said that BGDL created a "completely false" narrative about its design, engineering and construction business and was actively trying to induce investors to buy its shares based on false disclosures.

A preliminary investigation had revealed that Bharat Global falsely claimed to have orders from a McCain Group company and misrepresented orders from Reliance Industries Ltd, UPL Ltd and the Tata Group. The modus operandi in all such instances seemed to be using fake names for companies that resembled well-established entities.

BGDL claimed to have received orders from clients including McCain India Agro Pvt., UPL Agro Pvt. Ltd. and TATA Agro & Consumer Products. SEBI's investigation revealed that neither McCain, nor UPL nor Tata Consumer Products Ltd had any such subsidiaries.

In the Mar 26 order, SEBI confirmed the ban on the company from buying, selling, or dealing in the securities market and the restriction from associating with SEBI-registered intermediaries or any listed company.

As per the SEBI observations, BGDL’s management was involved in replacing the company’s leadership and approved a preferential allotment of shares to 41 select allottees. These actions, along with other false claims, were part of a broader scheme to manipulate the stock price, the regulator observed.

The preferential allottees profited by selling shares at artificially higher prices at the expense of investors.

Over 2% of BGDL’s shares were dumped on investors at falsely modified prices between Nov. 1 and Dec. 20, 2024, causing financial harm. Additionally, the number of public shareholders grew from 10,129 in September to nearly 45,000 by December, despite these shares being largely controlled by a few preferential allottees.

SEBI had also observed in its temporary order that continued trading of BGDL shares would expose retail investors to the risk of holding worthless stock. This is because the company’s share price had no connection to its actual business activities.

As part of its order, SEBI also impounded 'unlawful gains' accrued to
several noticees who got company shares via two preferential allotments earlier this year.