Mumbai: Market regulator Securities and Exchange Board of India (SEBI) on 20 February imposed a fine of Rs1crore on DLF Commercial Developers (DLFCD) for trading in the shares of Bhoruka Financial Services at the de-recognised Magadh Stock Exchange Association (MSEA).
In an order on 20 February, SEBI said MSEA’s renewal for recognition as a stock exchange was at a proposal stage when the transaction in the BFSL scrip took place.
DLFCD is a fully owned subsidiary of realty major DLF Universal, which is in the process of launching an initial public offer to raise over Rs 10,000 crore.
It appears the company was expecting the action from SEBI and had mentioned it in the Draft Red Herring Prospectus.
“There is pending litigation under the securities laws against Bhoruka Financial Services Ltd, one of our subsidiaries... be liable to a penalty which may extend up to Rs 10 million,” DLF Universal had mentioned in the DRHP.
Apart from DLF Commercial Developers, SEBI imposed a combined fine of Rs1crore on 11 others on a similar charge.
They include Vivek Agarwal, Umah Agarwal and Siddhartha Agarwal, Satyanarayan Vivek Kumar and Prabhu Securities Ltd.
“The period of trade in the BFSL scrip relates to August 1, 2005 to August 12, 2005, when the proposal to renew recognition of MSEA was still at proposal stage and was to be granted recognition from December 11 2005.