SEBI directs European American Investment Bank not to deal in securities market

Market regulator SEBI has confirmed its earlier order directing European American Investment Bank not to deal in the securities market in a matter related to alleged market manipulation using Global Depository Receipts. Euram Bank had filed written submissions before Sebi in October 2011. The regulator said "... the preponderance of probability at this stage suggests the involvement of Euram Bank in the alleged scheme of things." "... confirm the directions issued vide the ad interim ex-parte Order dated September 21, 2011 in the matter of market manipulation using GDR issues, against European American Investment Bank AG," it added. Sebi had earlier been alerted by its surveillance systems of the large scale off market transactions scrips of certain firms, IKF Technologies, Avon Corporation, CAT Technologies, Asahi Infrastructure, K Sera Sera and Maars Software. Preliminary examination had revealed that some foreign institutional investors, India Focus Cardinal Fund , KII, Mavi Investment Fund and Sophia Growth, were converting the Global Depository Receipts (GDRs) underlying the shares of the firms held by them into equity shares to sell in the Indian markets. It was also observed that most cancellations happened within a short period of time of their issue and on noticing that a few entities were repeatedly appearing as counterparties to 33-75% of those shares sold by FIIs in the scrips. The preliminary findings had pointed that India Focus was registered as a sub-account with Euram Bank. In its submissions, Euram Bank had said that it has not facilitated India Focus to trade in India as a sub-account by getting registered itself as an FII. Sebi, in its latest order said that it is "unable to accept this contention in the light of the trading activity of India Focus during the period January 1, 2009 to May 31, 2010. The only sub-account of Euram Bank is India Focus." "Euram Bank has prima facie facilitated India Focus by getting registered as an FII and contrary to other FIIs it has not done any trading in the stock market," it further said. In the order, SEBI also said that it is unable to consider the submission at this stage since the investigation in the matter is not yet completed. "Considering the facts and circumstances and also the submissions made, Sebi shall expeditiously complete the investigation in the matter, in the interest of justice and thereafter shall immediately take appropriate actions in accordance with law," it said. In another order related to the same case, Sebi modified its earlier order against Mavi Investment Fund and asked the firm to "deposit sale proceeds in a bank fixed deposit earning interest" and barred it from "withdrawing the money from the account without prior permission" of the regulator.