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SEBI pummels DLF & directors, rep’d by Dwarkadas, Shroff, Sundaresan, after mendacious IPO under 5 top law firms

SEBI: DLF lied in IPO
SEBI: DLF lied in IPO
The Securities and Exchange Board of India (SEBI) has banned real estate giant DLF and seven of its management from accessing the capital markets for three years after a finding of fraud.

Six of the company’s senior management and directors, including its promoter, were banned for “misleading and defrauding investors” in the realtor’s 2007 initial public offering (IPO), reported Quartz.

FirstBiz reported that SEBI found three “housewives” – wives of DLF managers – to be at the core of a complex shareholding structure that was used in sham transactions that were intended to mask their husband’s and, by extension, DLF’s continued ownership of three subsidiaries, Felicite, Shalika and Sudipti.

Those three allegedly masked subsidiaries were not disclosed in the 2007 public offer documents, and thus misled SEBI.

DLF denied any wrongdoing.

SEBI member Rajiv Kumar Agarwal wrote in the order (full copy below):

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 Noticees employed a plan, scheme, design and device to camouflage the association of DLF with its three subsidiaries namely, Felicite, Shalika and Sudipti. In this case under such plan, scheme, design and device, the Noticees suppressed several material information in the RHP/Prospectus of DLF and actively concealed the fact about filing of FIR against Sudipti and others. In the facts and circumstances of this case, I find that the 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. Therefore, the charge of violation of provisions of section 12 A(a), (b) and (c) of SEBI Act read with regulations 3 (a), (b), (c), (d) 4(1), 4(2)(f) and (k) of PFUTP Regulations against the Noticees is also established.


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. In my view, for the serious contraventions as found in the instant case,   deterrent actions to safeguard the market integrity. It, therefore, becomes incumbent to deal with contraventions, digression and demeanour of the erring Noticees sternly and take appropriate actions for deterrence.


Considering the above, I, in order to protect the interest of investors and the integrity of the securities market, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11, 11A and 11B thereof and regulation 11 of the PFUTP Regulations, clause 17.1 of DIP Guidelines and regulation 111 of the ICDR Regulations hereby restrain the following entities from accessing the securities market and prohibit them from buying, selling or otherwise dealing in securities, directly or indirectly, in any manner, whatsoever, for the period of three years […]

Shardul, Janak, Somasekhar fended for DLF (Somasekhar wins for one)

Amarchand Mangaldas Delhi managing partner Shardul Shroff appeared for DLF with senior advocate Janak Dwarkadas.

Shroff, briefing senior counsel JJ Bhatt, also appeared for chairman and promoter KP Singh, his son and vice chairman Rajiv Singh and his daughter and director Pia Singh.

JSA Mumbai partner Somasekhar Sundaresan with senior associate Paras K Parekh acted for director GS Talwar and director (legal) Kameshwar Swarup.

Clarification: Talwar was exonerated by Sebi, having been given the “benefit of doubt” by Agarwal because he was a non-executive director who was only involved in high-level strategy.

SEBI was represented by its deputy general manager Pranjal Jayaswal and assistant general manager Sahil Malik.

2007’s IPO law firm (and banker) battalion

The IPO in 2007 involved a veritable who’s who of Indian and foreign legal advisers, with AZB & Partners Delhi acting as domestic counsel for the company and Luthra & Luthra Delhi as book runners’ counsel, according to the prospectus.

Amarchand Mangaldas Mumbai was listed as “special legal counsel to the issue”.

International legal counsel to DLF was White & Case London, and the underwriters relied on Linklaters in London.

Kotak Mahindra Capital Company and DSP Merrill Lynch were global coordinators and book running lead managers, while (now defunct) Lehman Brothers Securities Mumbai was senior book running lead manager.

Mumbai-based Citigroup Global Markets India, Deutsche Equities India, ICICI Securities Primary Dealership and UBS Securities India acted as book running lead managers, with a raft of other banks in various roles on the issue.

HSBC Securities and Capital Markets (India) was the financial advisor to the company.

Photo by Harsh Mangal

SEBI pummels DLF

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