MUMBAI: The BSE Suspends Trading in Bharat Global Developers' Stocks

The Bombay Stock Exchange (BSE) suspended trading in the stocks of Bharat Global Developers on Monday after a Securities and Exchange Board of India (Sebi) investigation revealed that an over 10,000% rise in its price between November 2023 and November 2024 was fueled by false stock exchange disclosures that primarily benefited a few investors directly linked to the company's management.

Sebi, through an interim order, has also barred several entities involved in the pump-and-dump scam from the market. The stock, which rose from about Rs 16 in November 2023 to an all-time high of Rs 1,703 on November 28 this year, had closed at Rs 1,236 on Friday. It had hit the 5% lower circuit in Wednesday's and Thursday's sessions, according to BSE data.

According to Sebi's investigation report, the company changed its management in December 2023. Soon after, there were fresh issues of shares through the preferential offer route that eventually resulted in just 41 investors - all preferential allottees - holding 99.5% of the equity shares. These preferential allottees were marked as public shareholders, thus not breaking Sebi's shareholding norms for promoters of listed companies.

After the lock-in of shares allotted in the preferential offer ended, the company started making false disclosures to the exchanges about winning big orders from Reliance Industries, Tata Agro, UPL, and McCain India. These announcements drove the stock price higher, which was then used by the large shareholders to offload part of their holdings. Sebi has now asked the entities named in the order to present their case to the regulator within 21 days.