Why does DNG Converter insist on lossy conversion?

I use DNG Converter to convert RW2 files to DNG so I can work on them in various PP programs.
No matter whether or not I have the "lossy" box checked, DNG Converter insists on doing a lossy conversion.
How can I stop this?
Sample images:
Original RW2 image, with histogram:
DNG image - note loss shown on histogram. There is also posterized banding, although in the small image allowed on this site it is very hard to see.

Thank you for pointing out the problem. Preview from DNG Converter is JPEG.
==================================
UPDATE:
My previous comment, above, is irrelevant.
The preview is JPEG, but I am working with the DNG file. So my original question remains unanswered.
I have found the same issue with RW2 files. I will investigate settings for FastStone Image Viewer (the program I am using for editing). So far I find no options to change treatment of DNG or RW2.

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function(){return A.apply(null,[this].concat($A(arguments)))}
It is my (humble, and barely-informed) understanding that the DNG Converter 5.6 performs de-mosaicing upon the RW2
You could convert it in demosaiced format (it is an option under Preferences, if you select the compatibility as "Custom"); however, if Rawnalyze can display the DNG, then it is certainly not demosaiced.
function(){return A.apply(null,[this].concat($A(arguments)))}
Whether or not the DNG Converter 5.6 has altered any White Balance information contained in the original DMC-LX3 RW2 image-file
The converter usually changes the temperature and tint; however, Rawnalyze displays the coefficients of the raw channels, which are stored in the raw file either by the camera or by the raw/DNG converter.
function(){return A.apply(null,[this].concat($A(arguments)))}
the resulting DNG (converted from a DMC-LX3 RW2) shows "Shot WB Coefficients" as: Red = 1.0760; Green = 1.0000, Green = 1.0000; and Blue =1.1597 when viewed in Rawnalyze Histogram display mode
This is not excellent, but not horrendeous either. Have you tried using a totally clipped raw image as white balance template? It works with some cameras, but not with all. Give it a try and post the results pls:
a. shoot a white sheet with +4 EV bias,
b. verify in Rawnalyze if everything was clipped,
c. load that raw image in the camera as WB template,
d. make a shot with "custom WB" or whatever the name of that option is with your camera, i.e. using the previous shot as WB template,
e. verify the WB coefficients; they should be very close to 1.
Gabor

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Why does DNG Converter insist on lossy conversion?

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