UBS under Sebi scanner for round tripping

Companies in mining, liquor and real estate also being probed as per Sebi admission in Bombay High Court

In the midst of Special Investigative Team (SIT) on black money flagging off concerns regarding praticipatory notes and black money creation through the black money route, the Securities and Exchange Board of India (Sebi) has admitted to probing a case of alleged round tripping.

The case involves UBS Bank and eight companies panning sectors of mining, liquor and real estate. The markets regulator admitted to probing the case in Bombay High Court in February this year in a matter of Public Interest Litigation (PIL) filed in 2014.

The PIL had sought investigation in the matter from various investigative agencies including enforcement directorate, Serious Fraud Investigation Organisation (SFIO) and Sebi. The PIL was withdrawn once the markets regulator admitted to probing the case.

Sources indicate that the regulator has sought queries from the bank. But the investigations are still in preliminary stages after six months of admitting to probing the case.

Mark panday hong Kong based spokesperson person of UBS in an email replied that they do not have any comments to offer. An email sent to sebi on Tuesday did not elicit a response.

Once the investigation is complete conclusively it could lead prosecution against these entities. Alleged modus operandi involved by these companies was to send fund overseas in fictitious companies and bringing the money back to India through the bank.

The controversy around the p-notes as an alleged source of black money arose after the special investigative team on black money raised red flag on p-notes. 

The sit had suggested Sebi to have more regulations in place to determine the end beneficiary of the offshore derivative instruments (ODIs) and to curb the downstream transfer of the ODI. 

Sebi chairman U K Sinha in a statement to PTI stated that the regulator has enough mechanisms in place to trace the real beneficiary of p-note and sit only wants Sebi to know the ultimate beneficiaries of p-notes.