Sebi ban: DLF appeals in SAT; investment bankers fear regulator action

DLF, India's most heavily indebted property firm, has filed an appeal with the Securities Appellate Tribunal (SAT) against a ban from tapping capital markets for three years, a spokeswoman for the appellate told Reuters.
DLF, India's most heavily indebted property firm, has filed an appeal with the Securities Appellate Tribunal (SAT) against a ban from tapping capital markets for three years, a spokeswoman for the appellate told Reuters. Market regulator Sebi or Securities and Exchange Board of India on Monday barred DLF and its billionaire chairman Kushal Pal Singh along with five other company executives for failure to provide key information on subsidiaries and pending legal cases at the time of its record-breaking 2007 initial public offering. A senior DLF executive confirmed the appeal application to the SAT. The first hearing on the appeal will take place on Wednesday, the SAT spokeswoman said. The Sebi's move has come a heavy blow to the country's largest real estate developer as well as its six top executives, including chairman and main promoter KP Singh. The action was taken for "active and deliberate suppression" of material information at the time of the company's IPO in 2007. While the regulator did not impose any monetary penalty, the prohibition has barred DLF and the six persons, from any sale, purchase or any other dealings in securities markets for a period of three years, including for raising funds. Meanwhile, a report in The Economic Times today said the Sebi is also likely to probe the role of investment bankers in the IPO. DSP Merrill Lynch, Kotak, Citigroup, Lehman Brothers, Deutsche Equities, ICICI Securities, UBS Securities and SBI Capital Markets were the banks involved in the IPO, the report said. Earlier a report in the Mint daily had said that the Sebi order had mentioned Kotak Mahindra Bank's personal loans to some of the individuals involved in the wrongdoings. However, the regulator has not taken any action against the bank, it noted. As per the ET report today, the investment banking community is unsettled as they fear the Sebi, if it initiates a probe into their role, may restrict their operations. DLF had debt of more than Rs. 19,0000000000 as on June 30, 2014, while its already-proposed fund raising plans include nearly Rs. 3,5000000000 through issue of certain bonds to replace its costlier debt. This was one of the rare orders by SEBI where it has barred a blue-chip firm and its top promoter/executives from the market. DLF is the largest real estate group in the country with nearly Rs. 10,0000000000 annual turnover. On Tuesday, the company shares had plunged by nearly 30%, eroding the market value by about Rs. 7,5000000000. However, the stock regained some lost ground in the next trading session. DLF's IPO in 2007 had fetched Rs. 9,1870000000 -- the biggest IPO in the country at that time. Besides K P Singh, those barred from the markets include his son Rajiv Singh (Vice Chairman), daughter Pia Singh (Whole Time Director), Managing Director T C Goyal, former CFO Ramesh Sanka and Kameshwar Swarup, who was ED-Legal at the time of the company's public offer in 2007. On October 13, DLF had said it has not violated any laws and it would defend its position against any adverse findings in the SEBI order. "DLF has full faith in the judicial process and is confident of vindication of its stand in the near future," the statement had said. After its over four-year-long probe, SEBI found that a "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". In his 43-page order, SEBI's Whole-Time Member Rajeev Agarwal also said that violations are grave and have larger implications on safety and integrity of the securities market. With inputs from agencies