Citibank NA pays Rs 40.2 lakh to settle allegations of violations of FPI Regulations, Depositories Regulations

A settlement order was issued by the Securities and Exchange Board of India (Sebi) on August 27.

Citibank N.A, a designated depository participant (DDP), has paid Rs 40.2 lakh to settle allegations of violations of Foreign Portfolio Investors (FPI) Regulations and of Code of Conduct given under Depositories and Participant Regulations.

The allegation involved the copying or replication of a client's wet-ink signature without the knowledge of the client. The DDP submitted an application to the market regulator, in which the terms of settlement were given, including the amount of Rs 40.2 lakh and a list of remedial measures taken to enhance internal controls with regard to issues highlighted by the market regulator.

A settlement order was issued by the Securities and Exchange Board of India (Sebi) on August 27.

According to the details given in the order, a showcause notice dated February 9, 2024, was issued to the DDP. The notice stated that the following was observed and alleged:

Customer Acquisition Form (“CAF”) appeared to have been regenerated by the implementation team (“IM team”) and a member of the IM team had copied/replicated the end-client’s wet-ink signatures, without the knowledge of GC/end client.

Pending the adjudication proceedings, the DDP filed a settlement application proposing to settle the proceedings initiated against them through the showcause notice, without admission or denial of the findings of fact and conclusions of law.

The internal committee (IC) of Sebi recommended the settlement amount in a meeting held on May 7, 2024.

The DDP submitted the revised settlement terms (RST) including the suggested amount and a list of remedial measures to enhance internal controls.