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Sebi bans Barclays from issuing PNs

Sebi bans Barclays from issuing PNs
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First Published: Wed, Dec 09 2009. 11 41 PM IST
Updated: Wed, Dec 09 2009. 11 41 PM IST
Mumbai: The Securities and Exchange Board of India (Sebi) banned Barclays Bank Plcfrom issuing or otherwise transacting in new offshore derivative instruments (ODIs), also known as participative notes, or PNs, for having previously violated disclosure norms.
It said the order should be treated as a show-cause notice.
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 furnish a certificate “from an auditor of international standing” to this end.
ODIs 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.
n.subramanian@livemint.com
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First Published: Wed, Dec 09 2009. 11 41 PM IST
More Topics: Sebi | Barclays Plc | PNs | ODIs | Stock Markets |