sebi:EAD/AO/BJD/VS/117/2018

SEBI · SEBI · 2015-01-22 · BJ Dilip, Adjudicating Officer

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Violation found; consolidated monetary penalty imposed on the Noticee

Provisions invoked

• s. 15A
• s. 15
• s. 19
• s. 15H
• s. 15J
• s. 30
• s. 6(1)
• s. 27
• s. 97
• s. 74
• s. 98

Regulations

• Reg. 13
• Reg. 6(1)
• Reg. 13A
• Reg. 7A
• Reg. 10(c)
• Reg. 6(1)(d)
• Reg. 23(1)(c)
• Reg. 47(3)
• Reg. 5(b)
• Reg. 79

Parties

• European American Bank AG

Holding

The Adjudicating Officer held that European American Bank AG, as FII for sub-account India Focus Cardinal Fund, violated Regulations 7A and 13A of the FII Regulations and SEBI Circular dated April 15, 2010 and Regulation 10(c) corresponding to Regulation 23(1)(c) of FPI Regulations, and imposed a consolidated penalty of Rs. 2,00,000 under Sections 15HB and 15A(b) of the SEBI Act, 1992.

Full text

Adjudication Order in respect of European American Bank AG Page 2 of 19 APPOINTMENT OF ADJUDICATION OFFICER 2. Ms. Anita Kenkare was appointed as the Adjudicating Officer vide orders dated January 22, 2015 and July 1, 2016 under section 15-1 read with Section 19 of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act') to inquire into and adjudge under Section 15HB and/ or Section 15A (b) of the SEBI Act the alleged violations committed by the Noticee. Further, consequent to the inter-departmental transfer and postings, the undersigned has been appointed the AO, vide order dated October 4, 2017 to inquire and adjudge in the instant matter. SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

Adjudication Order in respect of European American Bank AG Page 3 of 19 were not profitable and IFCF received its own license. As described in Section 30.of your Notice ,the relevant failures to provide information and the non-compliance with the criteria for broad based funds as defines under explantion to Regulation 6(1))d) of FII Regulations have been observed via an email from the Financial Services Commission, Mauritius (“FSC )dated 24 May 2016.Therfore, all allegations raised against Euram Bank relate to the time after Euram Bank has stopped its activities under its FII-license in June 2011 and IFCF received its own license. At that time IFCF alone was responsible for compliance with the FII Regulations. On 21 September 2011 Euram Bank also gained knowledge from the interim order issued by SEBI relating to market manipulations by Panchariya and his companies. Consequently, Euram Bank immediately stopped all relations to Panchariya and gave an additional indication of suspected money laundering to the Austrian Financial Market Authority (Finanzmarktaufsicht,”FMA”).SEBI never accused Euram Bank of any breach of law, it was always clear that only Indian Law was broken by Vintage and Panchariya themselves as Euram Bank never had any contact with Indian brokers or Indian buyers. All pertaining transactions which were under Euram Bank’s FII-license by IFCF were carried out by IFCF at the Indian Stock Exchange only. After intense and detailed investigations by both the FMA and

Adjudication Order in respect of European American Bank AG Page 4 of 19 neglects or refuses to appear as required by Rule 4(3) before the AO, he may proceed with the inquiry in the absence of such person after recording the reasons for doing so. Thus, I am proceeding with the matter on the basis of material available on record with respect to the said Noticees. CONSIDERATION OF ISSUES

Source: SecMarx — sebi:EAD/AO/BJD/VS/117/2018. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.