Bombay HC directs SFIO to probe share round-tripping case

The petition was filed by a group of lawyers seeking speedy investigation

The high court here has directed the Serious Fraud Investigation Office (SFIO) to probe round-tripping involving Indian companies and global banks like UBS.

While hearing a petition, the court asked SFIO to file a reply on whether it had started any action, and if there was a case for investigation.

“We have no comments to offer. However, UBS AG, Mumbai branch and/or UBS Securities India Pvt Ltd have not received any communication from Securities and Exchange Board of India (Sebi) or the court about the allegations,” said a UBS spokesperson.

The petition was by a group of lawyers for speedy investigation by the Indian government and Sebi.

A lot of companies had come under the glare for allegedly manipluating their stock prices by money channelled via sub-accounts offered by foreign institutional investors (FII).

The companies spanning sectors such as real estate, mining and liquor have allegedly used UBS sub-accounts via the Mauritius route. This matter is reportedly under investigation by the markets regulator and has recently been referred to the enforcement directorate on whether there was a violation of the Prevention of Money Laundering Act.

The watchdog filed to the court it had initiated action against people in the case.

According to reports, Sebi had sent notices to the companies and the bank in April.

This investigation is based on a tip-off received from the UK's Financial Services Authority, which named companies that allegedly had accounts and FII sub-accounts with UBS and might have used these for bringing money into India via transactions that were illegal under India laws.

The petition was heard by the bench headed by Justice Anoop Mohta and Justice Nitin Jamdar. Union of India was represented by Parag Vyas and Sebi was represented by additional solicitor general (ASG), Kevic Setalvad.

Asked about it, UBS replied: "We have no comments to offer. However, UBS AG, Mumbai Branch and UBS Securities India Pvt Ltd have not received any communication from SEBI or the Bombay High Court about the allegations."

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In the previous hearing the petitioners submitted that they would be referring the matter to Special Investigative Team (SIT) on black money.