DLF IPO disclosure case: Sebi imposes Rs 85-crore penalties

The Securities and Exchange Board of India has imposed a total fine of Rs 860000000 on property developer DLF , its chairman KP Singh and several other related entities, including subsidiaries and its top management for not disclosing certain material information and facts in its IPO document. DLF has challenged Sebi's order before the Securities Appellate Tribunal.The regulator alleged that DLF and its top management had chosen not to disclose Sudipti, Shalika and Felicite as its subsidiaries and, thereby, actively suppressed material information in the offer documents, more particularly, information regarding related party transactions, financial information pertaining to subsidiaries and outstanding litigation/FIR against Sudipti, leading to misstatements in the offer documents.“This is a clear case of suppression of material information by the noticees (DLF and other entities) thereby depriving the investors of important information at the relevant time. Further, the noticees had acted in a fraudulent manner to the detriment of investors and the market in general and had posed a great threat to the safety and integrity of the market,” Sebi said in its order.“I have, therefore, no hesitation to conclude that the purported transfer of shares which took place in November 2006, was nothing but a sham,” Sebi's adjudicating officer Sunil Kumar said in his order.In response to Sebi’s adjudication orders DLF in a media statement said “We have been made aware of adjudication orders passed by Sebi under Section 15 of the Sebi Act, 1992 against DLF, its directors and other noticees. We are presently reviewing the said orders and after taking appropriate legal advice, we will challenge the said orders in appeal.On similar facts, Sebi had earlier passed an order dated October 10, 2014 interalia under Section 11 of the Sebi Act, 1992 against DLF as well its directors, which order was challenged by the company before the honorable securities appellate tribunal.”“DLF and its board wish to reassure its investors and all other stakeholders that it has not acted in contravention of law,” it said.