M&M Financial Services, a leading non-banking financial company, faced a sharp sell-off in its shares during early trading on April 23. The company’s stock plunged 8 percent after it announced the postponement of its scheduled board meeting to discuss the fourth-quarter results. This delay came in the wake of a fraud discovery at one of the company’s branches in the North East region.
The fraud involved forgery of KYC (Know Your Customer) documents related to retail vehicle loans, resulting in the misappropriation of company funds. According to the company’s notification to the stock exchange, the estimated financial impact of this deception is anticipated to be within Rs 150 crore.
At 10.00 am, shares of M&M Finance were trading at Rs 266.70 on the National Stock Exchange (NSE). The news of the fraud caused a surge in trading volumes, with 84 lakh shares changing hands on the exchanges so far, significantly higher than the one-month daily traded average of 27 lakh shares.
In response to the situation, M&M Financial Services has promptly initiated necessary corrective measures. The company has identified the required actions and has informed the exchanges that a few individuals involved in the fraud have been arrested.
The discovery of the fraud and the subsequent postponement of the fourth-quarter results announcement have spooked investors, resulting in the sharp decline in the company’s share price.
