UBS moves SAT over Sebi ban

UBS Securities Asia Ltd on Monday filed an appeal in the Securities Appletite Tribunal (SAT) against the Securities and Exchange Board of India (Sebi) order barring UBS Securities from issuing any offshore instruments for one year. Sebi passed the order on May 18 on UBS' involvement in the May 17, 2004 stock market crash.

"On June 27, UBS Securities Asia filed an appeal against the Sebi order on the basis that it does not accept the order's findings and expressly denies any deliberate misconduct. UBS wishes to stress that it remains entirely committed to the Indian market. As the matter is now before the tribunal, UBS is unable to comment further," an UBS statement said. Sources in SAT confirmed that the lawyers of UBS Securities Asia Ltd, AZB & Partners, on Monday filed an appeal against the order.

In connection with the May 17 crash, Sebi's wholetime director G Ananthraman had directed UBS to "establish the highest standards of the customer due diligence process in line with the requirements of the FII regulations of Sebi".

The foreign brokerage house was prohibited from rolling over any of its existing overseas derivative instruments (ODIs) for a period of one year.

Sebi has issued showcause notices to at least 12 entities in connection with last year's market crash. Sebi, in an order, had stated, "It was suspected that the steep market fall on May 17, 2004, could have been triggered as a result of UBS playing ducks and drakes with the market, accentuating the selling pressure for no reason linked to the fundamentals of scrips on the performance.

"By indulging in the putative transactions, UBS might have earned substantial gains," the order added.

According to Sebi, UBS made false claims while the probe was on. "The egregiousness of UBS' behaviour and non-cooperation with the regulator is based not on a stray instance but a slew of them, neither fortuitous nor serendipitous, holding out tell-tale strands of how it was fashioned as a deliberate strategy to obfuscate the proceedings," the Sebi order said.