Sebi fines Mauritius based FII for short-selling

The market regulator has fined Credit Suisse First Boston (Mauritius) Limited (formerly known as Kallar Kahar Investments Limited ), a foreign institutional investor, for short-selling shares at a time when it was banned from trading in the stock markets for price manipulation. D.Sura Reddy, the adjudicating officer appointed by the Securities and Exchange Board of India, said CSFB will have to pay Rs 1000000 fine as the company sold 14,78,170 shares of Reliance Industries on December 16, 2002 when its actual holding as on the trade date was 13,51,270 shares thus resulting in a short sale of securities to the extent of 1,26,900 shares. Credit Suisse First Boston (India) Securities Private Limited — a broker in which CSFB held 75% stake — was earlier suspended by SEBI for a period of two years in April 2001 for violation of the provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 or rigging of shares. CSFB submitted that short selling as due to genuine trading error on the part of its trader was a human error without any malafide intention or motive. It added that the excess shares sold (1,26,900 in number) were auctioned by BSE and as a result, it suffered a loss of Rs 3,67,312 since the shares were sold at Rs 295.51 on December 16, 2002 and were auctioned at Rs 295.45 and an auction commission of Rs 3.7400000 was paid. It added that the the sale did not cause any loss to any investor and quantity of shares short sold did not affect the price or volume of the shares of RIL. Sebi, however, did not accept the CSFB’s view and fined it for short-selling. Meanwhile, the Financial Times reported on Thursday that CSFB will reopen its Indian equity trading and brokerage business in 2006. CSFB will not seek a local partner for a joint venture, news agency Reuters said, quoting the the newspaper.