SEBI still has milk teeth, shows Brightcom

Why read this story?

Editor's note: The tale of Brightcom, its promoters and India's capital markets regulator is a story in three acts. One that reflects poorly on all involved. Act I What would you expect when a promoter group sells 90% of its stock in a company that has seen its share price rise very quickly and is currently under investigation by the securities regulator? At the very least there would be an exodus of investors and the company's shares would tank. Right? Well, the shares of Hyderabad-based digital marketing solutions company Brightcom Group, which is under a forensic audit by the Securities and Exchange Board of India, actually ended up rising. What’s your guess? That investors couldn’t get enough of Brightcom's exemplary growth story, which has already seen the stock move up from less than Rs 10 to Rs 145 in under a year?  The answer is simpler. Information about Brightcom’s promoters’ stake sale never made it to websites of the stock exchanges, even though it is a mandatory disclosure for companies. The regulator’s rules explicitly state that if promoters sell their stake or …