Sebi imposes R85-cr fine on DLF, related entities, executives

The Securities and Exchange Board of India (Sebi) has slapped a total fine of Rs 850000000 on DLF, its promoters, top officials and related entities for violation of Sebi norms during DLF’s initial public offer (IPO). In its first 53-page order, Sebi has asked DLF to pay a fine of Rs 260000000, while a similar amount — another Rs 260000000 — has to be paid collectively by seven persons — chairman KP Singh, his son and vice chairman Rajiv Singh, daughter Pia Singh, TC Goyal, Ramesh Sanka, GS Talwar and Kameshwar Swarup. In the second order, Sudipti Estates has been asked to cough up Rs 10000000, its two directors have been fined Rs 30000000, while fines ranging from Rs 10000000 to Rs 50000000 have been imposed on 19 other entities. [related-post] Last October, Sebi had barred DLF and six top executives 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 company named Sudipti Estates. While DLF has challenged this order before the Securities Appellate Tribunal, Sebi passed two fresh orders for irregularities. This could probably be the biggest ever penalty imposed by Sebi in a single case. “This is a clear case of suppression of material information... Further, the noticees had acted in a fraudulent manner to the detriment of investors and the market in general.... Therefore, it is necessary that a justifiable penalty is imposed...,” the Sebi order said. DLF said it did not violate any law and it will challenge the Sebi order. “We are presently reviewing the said orders and after taking appropriate legal advice, we will challenge the said orders in appeal,” DLF said in a statement. Sebi had begun an investigation after allegations by one Kimsuk Krishna Sinha that Sudipti Estates had duped him of Rs 340000000 in relation to a transaction for purchase of land, and he had registered an FIR against the firm. Sinha said in his complaint that Sudipti, DLF Housing Development Limited and DLF Estate Development Limited were sister concerns and inextricably linked and all of them were part of DLF Group. This was not disclosed by DLF in the IPO document despite the fact that Sebi rules clearly state about mandatory disclosures.