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MUMBAI: India's markets regulator has barred Societe Generale from conducting new transactions in offshore derivatives instruments until such time as it complies with the country's reporting requirements. In a notification late on Friday, the Securities and Exchange Board of India (SEBI) said SocGen which operates in India as a foreign institutional investor, had wrongly reported certain transactions.

The transactions related to the issue of overseas derivative instruments between January 2006 and January 2008 with Reliance Communications as the underlying security, to a company called Hythe Securities. Of the 48 transactions that SocGen had with Hythe, it had admitted to misreporting 14 transactions, said the SEBI order, which can be viewed on SEBI's website.

SocGen officials in Hong Kong and Australia could not be immediately reached for comment. Under Indian regulations foreign entities in India, acting on behalf of clients overseas, have to fully disclose information regarding the issue of off-shore derivatives instruments and provide details of the ultimate beneficiary client. SocGen has been given 30 days to reply to the order, which comes into effect immediately.

In December, SEBI had issued similar prohibitory orders against Barclays Bank Plc for reporting violations, regarding issue of ODIs with Reliance Communications as the underlying security.

IMO: Sounds reasonable to me. Barring seems to be for allegedly violating "know your client" rules that compel companies to provide complete information on overseas customers. Ultimately expulsion is certainly possible.