Sham transactions, misleading investors: SEBI cracks the whip on DLF

Sham transactions, misleading investors: SEBI cracks the whip on DLF
Sham transactions, misleading investors: SEBI cracks the whip on DLF
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The News Minute| October 13, 2014| 11.00 pm IST

The Securities and Exchange Board of India (Sebi) Monday barred real estate giant DLF and six of its executives, including chairman K.P. Singh, from participating in capital markets for three years for acting to "mislead" investors on the company's public offer.

"I find that the case of active and deliberate suppression of any material information so as to mislead and defraud the investors in the securities market in connection with the issue of shares of DLF in its IPO is clearly made out in this case," SEBI Member Rajeev Agarwal said in his Oct 10 order published Monday.

"I am satisfied that the violations as found in this case are grave and have larger implications on the safety and integrity of the securities market," he added.

Those prohibited from the markets include the chairman's son and vice-chairman Rajiv Singh, and daughter Pia Singh, who is whole-time director. Others barred are managing director T.C. Goyal, Kameshwar Swarup and Ramesh Sanka.

Sebi said the executives had violated various regulations including Sebi's Disclosure and Investor Protection (DIP) Guidelines and the PFUTP (Prevention of Fraudulent and Unfair Trade Practices) norms.

The regulator's DIP guidelines require that the initial public offer (IPO) prospectus contain all material information which shall be true and adequate so as to enable investors to make informed decisions on investing in the issue.

DLF had raised Rs.9,187 crore through the IPO in 2007.

"In this case, I have already found that the process of share transfer of three subsidiaries of DLF in Sudipti, Shalika and Felicite was through sham transactions as alleged in the SCN (show cause notice) and that the Noticees employed a plan, scheme, design and device to camouflage the association of DLF with its three subsidiaries namely, Felicite, Shalika and Sudipti," Aggarwal said in his order.

"In this case under such plan, scheme, design and device, the Noticees suppressed several material information in the RHP/Prospectus of DLF and actively concealed the fact about filing of FIR against Sudipti and others," he added.

"In this case, all the information which were not disclosed as found herein above, were material information," Sebi concluded.


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