DLF gets Sebi shock

According to the regulator, the realty major failed to disclose material information regarding an FIR filed against one of its subsidiaries and share transfer bet-ween related entities in its RHP while coming out with an IPO in 2007.

The regulator alleged that the process of share transfer by DLF in its three subsidiaries namely Sudipti, Shalika and Felicite was through sham transactions.

Sebi further said that the noticees (DLF and its executives) employ-ed a plan, scheme, design and device to camouflage the association of DLF with its three subsidiaries.

In this case under such plan, scheme, design and device, the regulator said that DLF and its executives suppressed several material information in the RHP and actively concealed the fact about filing of FIR against Sudipti and others.

“They have failed to ensure that the RHP/Prospectus contained all material information which is true and adequate, so as to enable the investors to make an informed investment decision in respect of the issue.”

“The noticees actively and knowingly suppressed several material information and facts in the RHP so as to mislead and defraud the investors in the securities markets in connection with the issue of shares of DLF. The violations as found in this case are grave and have larger implications on the safety and integrity of the securities markets,” the market regulator said in its 43-page order.

Sebi observed that economic offence is a serious crime, which if not properly dealt with, as it should be, will affect not only the country’s economic growth, but also slow the inflow of foreign investment by genuine investors and also casts a slur on India’s securities market.