February 21, 2007

Sebi imposes Rs 1 cr fine on DLF arm

Market regulator Securities and Exchange Board of India (Sebi) on Tuesday imposed a fine of Rs 1 crore on DLF Commercial Developers (DLFCD), a subsidiary of real-estate india major DLF Universal. The company has been penalised for dealing in Bhoruka Financial Services scrip at the de-recognised Magadh Stock Exchange in Patna. In its order against the DLF entity, Sebi said Magadh SE's application for renewal of recognition as a stock exchange was at a proposal stage when (between August 1 and August 12, 2005) the DLF group company carried out the said transaction. The bourse was granted recognition on December 11, 2005, the order mentioned. The Sebi order said that the promoters of Bhoruka Financial held nearly 2 lakh shares in the company, constituting 98.73% of its equity. They sold the entire stake to DLFCD for about Rs 90 crore, at Rs 4,490 per share. On the Magadh SE, the transactions had taken place under the 'permitted to trade' category based on an application by its member-broker Rajat Share & Stock Brokers, while Bhoruka Financial was listed on the Bangalore Stock Exchange. Apart from DLF Commercial Developers, Sebi also imposed a combined fine of Rs 1 crore on 11 others on a similar charge. These entities included promoters, directors of Bhoruka Financial, and their related entities. Interestingly DLF Universal, which is in the process of listing its shares on BSE and NSE through an IPO, has mentioned in its draft prospectus that it could face a fine up to Rs 1 crore for its dealings related to Bhoruka's shares. "There is pending litigation under securities laws against Bhoruka Financial Services, one of our subsidiaries... be liable to a penalty which may extend up to Rs 10 million," the company said in its IPO draft prospectus.