Sebi slaps Rs 1-cr fine on Goldman Sachs

Market regulator Securities and Exchange Board of India (Sebi) has slapped a penalty of Rs 10000000 on Goldman Sachs Investment (Mauritius) Limited (GSIML) for violation of norms relating to offshore derivative instruments. According to Sebi, Goldman Sachs International Limited (GSIL), an affiliate of GSIML, a sub-account registered with Sebi issued off-shore derivative instruments (ODIs) to an overseas corporate body (OCB) — namely Magnus Capital Corporation Limited (MCCL), a Mauritius based entity — and violated the declaration furnished in the fortnightly statement on issue of ODIs submitted to Sebi (as on August 15, 2003). GSIL which is a Sebi registered FII vide its letter dated August 20, 2003 furnished a statement detailing the ODIs issued against its positions in Indian securities (ODI report). The said statement did not contain the undertaking as prescribed in the Sebi circular. GSIML submitted that it was not clear about the reasons for providing such undertaking and in this connection they had sought clarifications from Sebi. ‘‘It is claimed by the GSIML that a declaration in a form acceptable to Sebi was submitted once it received such clarification,” Sebi said in its order. Sebi’s investigations have brought out several instances of violations by OCBs such as non-delivery of shares, purchase of shares on adjustment basis, booking purchase order without sufficient balances in their accounts, exceeding the prescribed ceiling of 5% for individual OCBs and violations of 10% aggregate ceiling, etc. The violation of rules where registered intermediaries — like GSIML having presence in securities/financial markets all over the world — are involved should be dealt firmly. This is required to ensure that law of the land, especially when the efficacy of Indian securities market is at stake, is enforced to the maximum and a message is given to the other market players that they need to be cautious in their dealings in the securities market. ‘‘In this regard, I also take a guidance from the JPC Report that failure on the part of FIIs to report about issue of PNs should be viewed seriously and should entail stringent punitive action,’’ the Sebi adjudicating officer said while imposing the fine.