Regulations
SEBI disposes case against Hem Securities

On the count of violating broker norms, SEBI gave Hem Securities 'benefit of doubt', noting that the alleged trade was carried out only for two clients and that too through a sub-broker's terminal

 
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) disposed the case against Hem Securities in a matter related to fraudulent trading and violations of broker norms with regard to shares of Autolite India Ltd (AIL), reports PTI.
 
Earlier, SEBI had alleged Hem Securities of executing synchronized, reversal/circular trades in the shares of AIL on behalf of its two clients -- Jyoti Jain and Rajeev Dadda.
 
After a probe, however, SEBI's adjudicating officer Piyoosh Gupta in his order said that "sufficient evidence is not available on record to conclusively establish the manipulative role played by the noticee (Hem Securities) or that the noticee had acted in concert with the clients and therefore, I intend to give benefit of doubt to the noticee on this count".
 
On the count of violating broker norms, Gupta gave Hem Securities 'benefit of doubt', noting that the alleged trade was carried out only for two clients and that too through a sub-broker's terminal.
 
SEBI had found both the clients, Jain and Dadda, had a common phone number which belonged to one Praveen Kumar Jain, a sub-broker of Hem Securities. The regulator also observed that all the orders were placed through the same terminal and location.
 
The regulator alleged that synchronized trades done on behalf of the two clients of Hem Securities constituted nearly 75% of the trading volume in the market in the scrip of AIL during the probe period of April-May in 2008.
 

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Karvy, CAMS evince interest in verifying Sahara investors

Karvy, CAMS, NSDL and CDSL have evinced interest in bidding for the job of verifying genuineness of about three crore investors in the high-profile Sahara case

 
New Delhi: At least four entities -- Karvy, CAMS, NSDL and CDSL -- have evinced interest in bidding for the job of verifying genuineness of about three crore investors in high-profile Sahara case on behalf of market regulator Securities and Exchange Board of India (SEBI), reports PTI.
 
SEBI is currently is in the process of selecting an In-Person Verification (IPV) Agency to conduct face-to-face verification of an estimated three crore bondholders of two Sahara group firms, by checking their identify and address proofs.
 
The Supreme Court has asked SEBI to facilitate refund of about Rs24,000 crore with 15% annual interest to these investors after ascertaining their genuineness.
 
While SEBI has extended the bid submission deadline for selection of such an IPV Agency by a month till 21st December, a pre-bid meeting arranged by the market regulator with the interested parties was attended by representatives of at least four know your client (KYC) Registration Agencies (KRAs).
 
SEBI has invited bids from public sector banks as well for IPV Agency, but the pre-bid meeting, held on November 7 at SEBI headquarters in Mumbai, was not attended by any bank representative, as per the minutes of the meeting.
 
The intending bidders whose representatives were present during the meeting included NSDL, CDSL, CAMS, Karvy and CVL.
 
Out of these, CVL (CDSL Ventures Ltd) is a wholly owned subsidiary of leading securities depository CDSL (Central Depository Services India Ltd) and is registered as a KRA.
 
The KRAs are authorised agencies to carry out KYC requirements for all the market entities, including brokerage firms and mutual funds.
 
The country's another major securities depository NSDL (National Securities Depository Ltd) also has a wholly-owned subsidiary, NSDL Database Management Ltd (NDML), which has been approved by SEBI to function as a KRA.
 
Besides, CAMS is a joint venture company with three shareholders -- HDFC Group, global private equity firm Advent International and software firm Acsys Software India Pvt Ltd.
 
Karvy Stock Broking Ltd's fully-owned subsidiary, KDMSL (Karvy Data Management Services Ltd), is also registered with SEBI for carrying out KRA activities.
 
SEBI had floated a tender for selection of IPV Agency in this case on 2nd November and had earlier asked the public sector banks and KRAs to submit applications by 22nd November.
 
The selected agency would have to meet the bondholders face to face to ascertain their existence, visit their given address to ascertain their residence proof and verify their original identity and address proofs vis-a-vis given details.
 
The agency would also collect cancelled cheques from the investors to facilitate the refund of money to them.
 
SEBI is also in the process of appointing investigating agencies to assist it in this matter, while it is also hiring a Registrar and Transfer Agent (RTA) for investor data and payment processing related works in the case.
 

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RBI relaxes norms for telcos to raise funds overseas for 2G

Successful bidders in the 2G auction will be allowed to avail of ECB under the automatic route from their ultimate parent company without any maximum ECB liability-equity ratio

 
Mumbai: The Reserve Bank of India (RBI) has relaxed norms allowing telecom companies to raise long term funds from overseas to refinance domestic loans taken by them to pay for 2G spectrum, a move that will help the stressed sector, reports PTI.
 
"The successful bidders making the upfront payment for the award of 2G spectrum initially out of Rupee loans availed of from the domestic lenders would be eligible to refinance such Rupee loans with a long-term external commercial borrowing (ECB), under the automatic route," the RBI said in a notification.
 
The relaxation in ECB norms, the RBI said, has been made keeping in view the "large outlay of funds required to be paid directly" to the government within a limited period of time.
 
The central bank further said that the successful bidders in the 2G auction will be allowed to avail of ECB under the automatic route from their ultimate parent company without any maximum ECB liability-equity ratio.
 
However, the ECB can be availed of from the parent company if the lender holds minimum paid-up equity of 25% in the borrower company, either directly or indirectly.
 
Further, the successful bidders can avail of short term foreign currency loan in the nature of bridge finance under the automatic route for the purpose of making upfront payment towards 2G spectrum allocation and replace the same with a long term ECB under the automatic route, RBI added.
 
"The relaxations in respect of the ECB liability-equity ratio, percentage of shareholding by the ultimate parent, refinancing of Rupee loans and bridge finance are part of a special dispensation applicable only to the successful bidders in the upcoming 2G spectrum auction," the RBI added.
 
The recent auction for 1800 MHz band got total bids worth Rs9,407.64 crore, just one-third of the minimum Rs 28,000 crore that the government had expected.
 
Telenor, Videocon and Idea Cellular were among the winners of spectrum in the recent auction. .
 
All other aspects of ECB policy, such as $750 million limit per company per financial year under the automatic route, end-use, average maturity period and reporting arrangements remain unchanged.
 
As per the extant policy, RBI added that the eligible borrowers in the telecom sector are permitted to avail of ECB for the purpose of payment for spectrum allocation, under the automatic route.
 
Successful bidders of 3G auction were also permitted to make the payment for spectrum allocation initially out of rupee resources to be refinanced with a long-term ECB under the approval route.
 

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