Business Daily from THE HINDU group of publications
Tuesday, Aug 15, 2006
Business Daily from THE HINDU group of publications Tuesday, Aug 15, 2006 |
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Regulatory Bodies & Rulings Markets - Foreign Institutional Investors Industry & Economy - Economic Offences Our Special Correspondent
Chennai , Aug 14 The Securities and Exchange Board of India (SEBI) has adjudged that Citigroup Global Markets (Mauritius) Ltd (CGML), an affiliate of the global banking conglomerate Citigroup, be levied a penalty of Rs 1 crore. The adjudication and the consequent penalty arose from certain false statements made in the declaration sought by SEBI with regard to investments made by CGML in the Indian capital market. SEBI had asked all foreign institutional investors (FIIs) and persons holding a sub account with a registered FII to declare their outstanding offshore derivative instruments as on August 15, 2003. (Offshore derivative instruments are issued to overseas investors and are so called, as they derive their existence from the ownership of underlying shares in an Indian company.) In the list furnished by CGML, SEBI had contended that the former had not listed instruments issued by it in favour of one Magnus Capital Corporation (MCCL), an overseas corporate body. The discrepancy came to light in the course of response furnished by officials of Citigroup to specific queries sought by SEBI. The Citigroup had furnished a statement of warrants listed in Luxembourg as issued by Citigroup Global Markets Holdings Inc (CGMH), which contained the name of Magnus Capital Corporation as one of the beneficial owners. It had described these warrants as offshore derivative instruments and more significantly, described CGMH as an affiliate of CGML the sub-account holder under the FII regulations. Further, Citigroup had also said that CGML the registered foreign institutional investor through who CGMML had maintained its sub-account for Indian market operations and the other two entities are to be collectively regarded as part of the Citigroup. SEBI had contended that investments made by Magnus Capital Corporation in the Indian capital market through offshore derivative instruments issued by CGMH ought thus to have figured in the statement furnished by the CGMML and its omission constituted a violation of the relevant SEBI Regulations governing foreign institutional investors.
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