Market regulator the Securities and Exchange Board of India (Sebi) today asked FII Societe Generale to explain why its registration in India should not be cancelled for providing wrong information on issuance of a financial instrument which enabled an overseas entity to invest in shares of Anil Ambani-led Reliance Communications (RCom).
This is the second foreign entity after Barclays to come under Sebi scanner for similar irregualarities.
"Societe Generale is required to show cause as to why appropriate proceedings including cancellation of its certificate of registration as an FII should not be initiated," Sebi said.
Sebi also banned Societe Generale of France from issuing any fresh overseas derivative instrument (the financial instrument) for providing wrong information about one Hythe Securities to which it issued such instruments.
"I hereby direct Societe Generale... Not to issue/subscribe or otherwise transact in any fresh/new ODI till such time it provides a true and correct reporting of its ODI transactions to Sebi," said K M Abraham, whole-time member of Sebi, in his order.
The underlying securities for which ODIs were issued were of RCom.
Sebi said regulator issued the order and the show cause notice as the French firm could not provide information about the final beneficiary of ODI and in fact gave wrong information that Hythe Securities is the final beneficiary.
Earlier, Sebi had directed Barclays not to issue fresh ODIs after it provided wrong information. Barclays had entered into an ODI contract with UBS with RCom shares as underlying securities.
