12 December 2009
The Securities and Exchange Board of India (SEBI)
banned Barclays Bank Plc from issuing or otherwise
transacting in new Offshore Derivative Instruments (ODIs),
also known as participative notes, or PNs, for having previously
violated disclosure norms.
SEBI said the ban will be in effect “till such time as
Barclays satisfies SEBI that it has put adequate systems,
processes and controls in place to ensure true and correct
reporting of its ODI transactions to SEBI”.
It also directed Barclays to Promissory Notes
Bfurnish a certificate “from an auditor of international
standing” to this end.
ODIs or Promisory Notes are investment vehicles used
by overseas investors to buy into Indian stocks or derivatives
SEBI found irregularities in disclosures regarding
four ODIs issued on 15 December 2006, with shares of
Reliance Communications Ltd as underlying assets.
Barclays had reported these as being issued to UBS AG
when they were actually issued to Hythe Securities,
an entity regulated by the UK’s Financial Services Authority.
Subsequently, SEBI found that Hythe Securities had issued
them to Pluri Emerging Companies PCC Cell E Emerging Markets
Growth Fund. Here, too, SEBI found Barclays Bank guilty of
flouting rules, as issuers must report any onward issuance of ODIs.
A Barclays Bank spokesperson said the issue pertained to
Barclays Capital and said it was too late in the evening
to comment as they are yet to study the order.
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