New Delhi: As it continues its fight againsts uspected illicit funds being routed through stock markets, SEBI has initiated an internal study of suggestions made by the Supreme Court-appointed SIT on black money and the matter would be discussed by the regulator's board later this month. This comes at a time when SEBI has already acted against over 950 domestic entities for suspected tax evasion through stock exchange platform, while at least 25 offshore entities are under its scanner for providing investment services to corporates and High Networth Individuals (HNIs) here in a clandestine manner.
These offshore units set up in global financial hubs, including those linked to a few large European banks as also boutique investment service providers run by persons of Indian origins, are offering hybrid financial products to their clients in India while avoiding any regulatory oversight. In case of the Indian individuals and companies, SEBI has barred them from the capital markets as an interim measure while further proceedings are currently underway.
These cases have also been referred for further action to other agencies including the Income Tax Department and the Enforcement Directorate, a top official said. With regard to the offshore units, the official said that their role is also being looked into for suspected manipulation of shares through a possible nexus with the company promoters and the brokers here. In its latest report, the Special Investigation Team on Black Money had suggested that SEBI needs to further strengthen its monitoring mechanism to detect instances of the stock market platform being misused for tax evasion.
SEBI Chairman U K Sinha recently said that the regulator has got a every effective surveillance system which generates over 100 alerts a day and almost all of the 950 entities, which have been barred in recent months, were brought to book after leads generated through these alerts. SEBI is also sharing the information with Tax Department and the Financial Intelligence Unit, while its actions are not limited to barring them from the markets and prosecution proceedings have been initiated in a number of cases.
Notwithstanding a robust mechanism in place, SEBI has initiated an internal discussion on the suggestions made by the SIT and the matter would be further discussed during the markets regulator's next board meeting later this month. If necessary, a public consultation process can be initiated if SEBI's board is of the view that additional measures need to be taken to tackle the black money menace at its end, the official added.
Among other suggestions, SIT had said that obtaining information on 'beneficial ownership' of P-notes is of crucial importance to prevent their misuse and " SEBI needs to examine the issue raised above and come up with regulations where the 'final beneficial owner' of P notes or Offshore Derivative Instruments are known".
