Market regulator Securities and Exchange Board of India (SEBI) has barred DSQ Software and its promoter Dinesh Dalmia for seven years from capital markets. The order came after the regulator, found a fraudulent trading in 1998, which led to a sharp rise the company's stock price after the company and its promoter made some misleading statements to induce sale or purchase of securities.
Sebi's order stated that the percentage rise in price of the shares of DSQ was higher as compared to that of other companies in the same industry. age increase in other scrips varied from 140-340%, whereas increase in the price of the shares of DSQ was around 752% during January-December, 1998 as compared to Infosys (174 %), Wipro (271 %), Satyam (339%), NIT (141%) and Silverline (271%).
SEBI said that Dinesh Dalmia, being the promoter and Managing Director of DSQ, was responsible for reducing the free float of shares by purchasing shares through his wife (Radha Dalmia) and filing cases in the court directly and indirectly through his affiliated entities which resulted in the stay of transferability of a substantial number of shares (28% of the equity capital).
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SEBI said that three cases including one against UTI Bank (Kolkata) were filed by Dalmia and other entities related to him to create an artificial scarcity of floating stock. It was also found that price sensitive statements were made by the company to "create a positive sentiment" for the shares and these statements were found to be misleading in nature and had induced public to purchase the shares of DSQ which led to an increase in price of its scrip, the Order said.
The company also made misleading statement of bagging a contract with Japan-based Unisia Jecs Corp and related to future opportunities for DSQ.
Rajeev Kumar Agarwal, whole time member of SEBI in his order said that in order to protect the interest of investors and the integrity of the security market, in exercise of the power conferred on his, he restrain DSQ Software LTd and Dinesh Dalmia froma ccessing the securities market and also prohibit them from buying, selling and otherwise dealing in securities market directly or indirectly in any manner whatsoever, for a period of seven years.