DLF chairman and CEO

KP Singh

MUMBAI: DLF ’s run-ins with regulators continues to haunt it. On Monday, market regulator Sebi barred the Delhi-based real estate major and six of its top executives , including promoter-chairman K P Singh, from the capital market for three years due to lack of disclosure in the company’s IPO prospectus when it went public in 2007.The Sebi order follows a Rs 630-crore fine imposed by fairplay regulator Competition Commission of India (CCI) against DLF for abusing its dominant position to seriously discomfit flat owners in three Gurgaon apartments. The case is now in the Supreme Court.The Sebi order, which relates to non-disclosure of an FIR against Sudipti Estates — a subsidiary of DLF — during the IPO process, now curtails DLF’s ability to raise funds from the market.In its order, Sebi said that it found DLF and its directors, including Singh’s son Rajiv and daughter Pia, guilty of “active and deliberate suppression” of material information at the time of its public offer. The three others banned by Sebi are T C Goyal (MD), Kameshwar Swarup and Ramesh Sanka, both former directors on its board. Sebi, however, did not pass any order against G S Talwar, who was a non-executive director at that time, and gave him ‘benefit of doubt’. Sebi barred DLF and these six people from ‘accessing the securities market’ and prohibited them from ‘buying, selling or otherwise dealing in securities, directly or indirectly,’ for three years.According to sources DLF will likely contest the order in Securities Appellate Tribunal. Till late on Monday DLF, did not send its official comment on the Sebi order.In April 2010, under order from Delhi high court, the market regulator started a probe to see if the disclosures made during DLF’s IPO were proper. The HC order came after Kimsuk Krishna Sinha, a Delhi resident filed a case in the HC. In 2007 Sinha had also complained to Sebi against DLF which related to the company’s dealings with other companies which were alleged to be closely related to the real estate major.After serving a show cause notice (SCN), giving DLF and its directors to examine relevant documents based on which the SCN was served, Sebi also gave them a chance for personal representation. Post the due process, Sebi barred the company and the six people.Sebi wholetime member Rajeev Kumar Agarwal found DLF and its top executives to have violated, among other laws, Disclosure and Investor Protection Guidelines and Prevention of Fraudulent and Unfair Trade Practices norms. “In this case, I have already found that the process of share transfer of three subsidiaries of DLF in Sudipti, Shalika and Felicite was through sham transactions as alleged in the SCN and that the seven entities employed a plan, scheme, design and device to camouflage the association of DLF with its three subsidiaries,” the order noted. “I am satisfied that the violations as found in this case are grave and have larger implications on the safety and integrity of the securities market,” Agarwal wrote.Through its IPO in 2007, DLF had raised about Rs 9,200 crore and the stock was listed on the bourses on July 5, 2007.