Sebi probes companies, global banks for round tripping

Tags: News
Capital market watchdog Sebi is probing at least three large global banks and many Indian companies for alleged round tripping of funds by way of multi-layered transactions.

The Securities and Exchange Board of India (Sebi), which has been looking into the matter since late 2013, has issued show-cause notices to companies, sources said.

Swiss banking majors UBS and Credit Suisse as well as British financial services giant HSBC are also believed to have come under Sebi's scanner, they added.

A senior official declined to identify the entities being probed, saying it could come in the way of investigations.

He also said irregularities have been noticed in the share prices of 15-20 companies and it is not necessary that the firms or their promoters are involved in wrongdoing.

He noted that not all names reported in the media are correct and there are many more that are under the scanner.

Some portfolio managers at some banks, which have a significant presence in the Indian financial markets, could have helped clients route money back into the country as foreign funds using investment vehicles across jurisdictions.

"UBS does not comment on market speculation or rumour and, in any case, considers all correspondence with the regulators confidential," Hong Kong-based spokesman Mark Panday said.

Credit Suisse declined to comment, saying the matter is market speculation. An HSBC India spokesperson declined to comment.

The regulator feels some promoters may have been involved in such practices to boost share prices of their companies by showing a strong FII interest, sources said.

Sebi is coordinating with regulators and agencies in India and abroad in this case, where some well-known companies and industrialists are suspected to be involved, they added.

According to sources, while the banks may not have been directly involved, their employees may have dealt with the clients without keeping the banks in the loop.

Sebi is also looking at the possible use of Protected Cell Companies (PCCs) from Mauritius, British Virgin Islands, Cayman Islands and Seychelles for alleged round-tripping of funds back into the capital market in the form of foreign institutional investor and overseas venture capital money.

In 2010, Sebi had barred PCCs from investing in Indian markets through foreign institutional investors after it came across instances where these entities were used to route money back into the markets as FII funds.

PCCs are specially designed entities that may comprise of cells, with funds of various investors, in such a manner that there is legal segregation and protection of assets and liabilities for each cell.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Bureaucrats have enjoyed flying miles at taxpayer expense for too long

    The beleaguered Indian taxpayer will certainly applaud prime minister Narendra Modi’s attempt to deliver on his promise of cutting down fiscal defic

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Varun Dutt

<b>Riskfactor</b>: CHAIN REACTION

A domino effect is the cumulative effect produced when one ...

Zehra Naqvi

Rememberance and forgetting are crucial

Memories are so vital to our lives that they can ...

Dharmendra Khandal

Sandalwood may get extinct if not protected

When we talk of sandalwood, the most common usage that ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture