Securities and Exchange Board of India on Tuesday warned it would take stern action against foreign institutional investors who failed to disclose details on participatory notes issued to investors.

Goldman, Citigroup under Sebi scrutiny

Asked about the adjudication action initiated against Citigroup, Sebi chairman G N Bajpai told reporters "all FIIs must disclose details on PN investments on fortnightly basis".

"If any entity (FII) does not provide information within the specified timeframe, it would be subject to regulatory process including adjudication," he added.

He, however, refused to elaborate on the action against any specific FII.

The market regulator has started legal action against Citigroup for failing to disclose details of PN upto July 2003 to monitor funds coming through the FII route into the country, Sebi sources said.

Citigroup had issued participatory notes to CSFB against Indian securities norms and details of these have also been sought, they informed.

Magnus Capital Corporation, a Mauritius-based overseas corporate body, had subscribed to PN issued by Citigroup and Goldman Sachs.

According to Sebi's analysis of FII investments, 26 per cent of foreign investments has come through issuance of PNs.