Mumbai: International investment banker Goldman Sachs on Thursday received a major relief over issuance of offshore derivatives instruments with appellate body SAT reversing market regulator Sebi’s order.
Securities Appellate Tribunal (SAT) in its ruling in the Goldman Sachs case not only deprecated the conduct of the adjudicating officer of Sebi but also directed the regulator to pay Rs1 lakh to the investment banker as cost of litigation.
Sebi had earlier imposed a penalty of Rs 1 crore on Goldman Sachs Investment (Mauritius) Limited for not submitting the information about issuance of offshore derivatives instruments (ODIs) in a prescribed format and with the requisite declarations.
The present case pertains to issuance of ODIs by Mauritius-based affiliate of Goldman Sachs in November 2002 with shares of Himachal Futuristic Communications as the underlying security. The ODIs, after passing through several hands, reached Magnus Capital Corporation Limited, an overseas corporate body (OCB).
Sebi later through a circular in August 2003 revised the format for reporting of investments by foreign institutional investors.
Under the revised format, foreign institutional investors and their sub-accounts were required to give a declaration that no ODIs were issued to Indian/residents, NRIs/PIOs/OCBs.
Following the circular, Goldman Sachs filed the report with Sebi along with a declaration that was substantially different than one prescribed by the regulator.
Taking objection to the report, Sebi imposed the maximum penalty of Rs 1crore for furnishing false declarations.