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Nilanjan Dey
Jayanta Mallick

It may be required to add to its disclosures, says SEBI chief

Kolkata , May 9

A little-known financial services company that recently caused a furore on the Magadh Stock Exchange (MgSE) in Patna may have a bearing on DLF's issue. The real estate giant is set to tap the capital market through its maiden initial public offering.

The case in point was the otherwise dormant Bhoruka Financial Services Ltd, a company that transacted on the Bangalore Stock Exchange well over 15 years ago and was unexpectedly "permitted" to trade on the MgSE, an exchange that did not even have a settlement guarantee fund.

The issue has already reached the SAT (Securities Appellate Tribunal) hearing stage. If it is not addressed, DLF may well have to include it as part of its offer document by way of a disclosure.

When asked, Mr M. Damodaran, Chairman of the Securities and Exchange Board of India (SEBI), said the matter was at a critical juncture. He agreed that DLF may be required to add to its list of disclosures.

An overwhelming part of the company's capital was offloaded in favour of the Delhi-based DLF at Rs 4,490 per share, described as "incredibly high" by SEBI in its earlier report. The stock had actually traded last in 1998 for Rs 5!

The deals were executed by the company's promoters as sellers, while DLF was the acquirer.

It may be mentioned that the Officiating Executive Director of MgSE, Mr C.M. Pandey, was suspended. Rajat Share & Stock Broker, the MgSE member who facilitated the transactions without following the `Know Your Client' criteria, was directed not to deal in stocks. Further, the demat shares lying with the Central Depository Services were impounded.

More Stories on : Financial Services | IPOs | Real Estate & Construction | Economic Offences

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Bhoruka Financial Services could have a bearing on DLF IPO

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