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BW Businessworld

DLF Says Reviewing Huge Penalty Imposed By Sebi

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Property developer DLF Ltd said on Friday it was reviewing an order from the country's market regulator that fined the company and its top management $8.4 million as part of a broader probe into the firm's lack of disclosure during its initial public offering (IPO).
"We are presently reviewing the said orders and after taking appropriate legal advice, we will challenge the said orders in appeal," the company said in a statement.
It added that it had not acted in contravention of law either during its initial public offer or otherwise.
The Securities and Exchange Board of India (Sebi) disclosed the penalty on Thursday, as part of the same case under which it last year banned the company from raising capital for three years, a verdict which DLF is appealing at a securities tribunal.
In the biggest-ever penalty in a single case, Sebi slapped fines totalling Rs 86 crore on realty giant DLF, its top executives, their family members and various other related entities for entering into "sham transactions" to mislead IPO investors about eight years ago.
Those penalised include chairman K.P. Singh, his son and Vice Chairman Rajiv Singh, daughter Pia Singh, as also three "housewives" married to "key management personnel" of the DLF group for "fraudulent and unfair trade practices".
In the same case, Sebi in October last year barred DLF and its six top executives, including Singh and his two children, from markets for three years for suppressing key information at the time of its IPO in 2007, including about certain "sham transactions" involving an associate firm, Sudipti Estates.
While DLF and others denied any wrongdoings in its submissions before Sebi, the regulator said they "knowingly suppressed material facts and information" in the IPO papers.
Debt-laden DLF is going through tough times with various regulators. Fair trade watchdog CCI, which has earlier imposed Rs 630 crore fine on it, recently ordered two fresh probes against the group for abuse of dominance. The Rs 630 crore penalty was also upheld by the Competition Appellate Tribunal, after which the company approached the Supreme Court.
DLF shares have also been under tremendous pressure for several months, while it has been monetising its assets to pay off debt, which stood at over Rs 20,000 crore at end of 2014.
While the earlier Sebi order did not involve any monetary penalties and has been challenged before the Securities Appellate Tribunal, the regulator on Thursday passed two fresh orders, for related irregularities, to impose penalties totalling Rs 86 crore on as many as 41 entities. Proceedings against one person has been abated because of his death.
As per the first order running into 53 pages, DLF has been fined Rs 26 crore, while a similar amount has to be paid collectively by seven persons - Singh and his two children, T.C. Goyal, Ramesh Sanka, G.S. Talwar and Kameshwar Swarup.
This itself is the biggest-ever fine imposed by Sebi in a single case, barring the "disgorgement" or refund orders in which cases Sebi directs return of the money garnered through ill-gotten means or illicit investment schemes.
In the second 55-page order, Sudipti has been asked to cough up Rs 1 crore, its two directors have been fined Rs 3 crore, while fines worth Rs 1-5 crore have been imposed on 19 others. The penalties are between Rs 5-15 lakh for the others.
All fines need to be paid within 45 days, Sebi said.