sebi:WTM/GA/1/ISD/5/05
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Provisions invoked
- s. 11
- s. 11(4)
- s. 19
- s. 11B
Regulations
- Reg. 7
- Reg. 6
- Reg. 199
- Reg. 15
- Reg. 20
- Reg. 20A
- Reg. 15A
- Reg. 15(A)(1)
- Reg. 7A
- Reg. 15A(1)
Parties
- UBS
Holding
UBS failed to comply with KYC requirements under Regulation 15A and information-furnishing obligations under Regulations 20 and 20A of the FII Regulations and Clauses 1, 2, 5 and 6 of the Code of Conduct for FIIs, with conduct detrimental to orderly market development.
Full text
2 As on May 14, 2004, it had built up NIFTY Futures short positions to the tune of Rs.434 crores and stock Futures short positions to the tune of Rs.292 crores. Thus, UBS was a significant participant in the cash as well as the derivatives (F&O) segment of the Indian securities market during May 2004.
3 requisite information, with UBS remaining parsimonious in providing the information sought. 1.5. By indulging in the putative transactions UBS might have earned substantial gains. Further it was suspected that the said gains might have accrued to UBS due to unprecedented wave of sale in the cash market with its cascading effect of depressing the cash as well as futures market, with the concomitant favourable impact on the short positions in the futures segment held by it. The data obtained from UBS reveals that, while UBS incurred a loss of Rs.17.54 crores on May 17, 2004 on account of its sale in the cash segment, its short positions in Futures (derivative) segment earned it a mark to market credit (amounting to the profits earned on account of the short positions in the futures segment) of Rs.59.37 crores resulting in a net gain of Rs.41.83 crores.
4 corporate bodies (which are majority owned or controlled by non resident Indians). 2.2. In reply, UBS vide e-mail dated August 7, 2004 stated that they had written to each of the investment managers for the investment funds that were identified in SEBI’s e- mail dated 30 July 2004; and have requested to provide UBS Securities with information in relation to their trading during the relevant days in May 2004 and whether the investment funds have "major shareholders"; they have classified a major shareholder as any one person or entity that owns in excess of 20% of the shares in the fund. Alternatively, they have advised that responses may be sent directly to SEBI.
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Source: SecMarx — sebi:WTM/GA/1/ISD/5/05. 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.