Suspecting illicit insider trading and market manipulation through misuse of the controversial 'participatory note' route, Sebi is probing a possible nexus between promoters of listed companies, investment bankers and foreign funds for such activities.The probe follows several instances of listed company shares being possibly manipulated through concerted efforts of their promoters and market intermediaries such as investment banks and foreign funds during share sales.
Those under scanner include funds operating from the financial centres of Mauritius, Singapore and Hong Kong, while the role of some major financial institutions from the US, Europe and within India are also being examined, a senior official said.Sebi is currently in the process of seeking details from these banks and the listed companies concerned and some of these entities have promised full cooperation in the matter.
The probe so far has suggested that foreign funds, including well-known hedge funds that recently expanded their exposure to Indian markets, could have abused a lacuna in the disclosure-based regulatory regimto make illicit gains