CSFB submitted its application for renewal of FII registration to SEBI which was considered and it was prima faice felt that renewal of registration should not be granted. Accordingly in terms of Regulation 11(1) of the Regulations, a show cause notice dt. September 3, 2002 issued mentioning inter alia that Credit Suisse First Boston (I) Securities Pvt. Ltd., their broking affiliate in India has been suspended for a period of 2 years and that due to the suspension of the said stock broker, they are not fulfilling the provisions of Regulation 6(1)(f) of the Regulations.
In the aforesaid show cause notice CSFB was advised to explain within 30 days from receipt of the same as to why the application for renewal of FII registration should not be rejected and also given their right to exercise personal hearing before the Chairman SEBI.
In response to this show cause notice, CSFB submitted their explanation vide letter dt. September 17, 2002 and also on their request a personal hearing was granted to CSFB by Chairman SEBI on October 28, 2002.
Chairman SEBI considered the explanation given by CSFB vide their letter dt. September 17, 2002 as well as during the personal hearing held on October 28, 2002 and concluded that :
"CSFB being holder of 75% shareholding in its Indian broking affiliate i.e. Credit Suisse First Boston (I) Securities Pvt. Ltd., is inextricably linked to the broker who has been suspended for a period of 2 years with effect from April 18, 2001 for violating the provisions of SEBI ( Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market ) Regulations,1995 and SEBI ( Stock Brokers and Sub-Brokers ) Regulations,1992."
For the reasons stated above, Chairman SEBI is of
the opinion that CSFB is not a fit and proper person as required under
Regulation 6(1) (f) of the Regulations. Therefore, applications submitted
by M/s Credit Suisse First Boston on March 25, 2002 for renewal of its
FII registration and also renewal/registration of its sub-accounts viz.
Kallar Kahar Investments Limited, Credit Suisse First Boston (Cyprus) Limited
and Credit Suisse First Boston , Singapore Branch have been rejected by
Chairman SEBI vide order No. CO/387/FII/11/2002 dated November 27, 2002.