Shares of real estate giant DLF Tuesday fell sharply by over 28 percent, wiping-out Rs.7,439 crore from its market valuation, a day after Sebi imposed a three-year ban on the company and its top executives from capital markets for acting to "mislead" investors on its public offer.
DLF stock closed Tuesday at Rs.104.95 a share, down 28.46 percent over its previous close on the Bombay Stock Exchange (BSE). At the NSE, the stock fell 27.98 percent to settle at Rs.105.80.
The fall led to a Rs.7,438.67 crore loss in DLF's market valuation which stood at Rs.18,701.33 crore at the close of trade Tuesday.
Reacting to the Sebi order, DLF said it had not violated any laws and would defend its position against any adverse findings in the order.
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"DLF and its board wish to reassure its investors and all other stakeholders that it has not acted in contravention of law either during its initial public offer or otherwise," the company said in a statement.
"DLF has full faith in the judicial process and is confident of vindication of its stand in the near future," it added.
DLF had raised Rs.9,187 crore through the IPO in 2007.
"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," SEBI Member Rajeev Agarwal said in his Oct 10 order published Monday.
"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," he added.
Those prohibited from the markets include DLF chairman K.P. Singh, his son and vice-chairman Rajiv Singh and daughter Pia Singh, who is whole-time director. Others barred are managing director T.C. Goyal, former CFO Kameshwar Swarup and former ED (Legal) Ramesh Sanka.
Sebi said the executives had violated various regulations including Sebi's Disclosure and Investor Protection (DIP) Guidelines and the PFUTP (Prevention of Fraudulent and Unfair Trade Practices) norms.
The regulator's DIP guidelines require that the initial public offer (IPO) prospectus contain all material information which shall be true and adequate so as to enable investors to make informed decisions on investing in the issue.
"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 (show cause notice) 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," Agarwal said in his order.
"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," he added.
"In this case, all the information which were not disclosed as found herein above, were material information," Sebi concluded.