IDBI AMC, trustee firm settle case with Sebi, pay over Rs 90 lakh

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Published: June 2, 2020 8:40 AM

Sebi in its circular stated that application dated November 25, 2019, both the entities proposed to Sebi to settle  the instant proceedings.

IDBI Asset Management, IDBI MF Trustee company, securities and exchange board of India, Sebi, ballarpur industries downgradingAn inspection of IDBI MF was carried out by Sebi in January 2018.

IDBI Asset Management and IDBI MF Trustee Company on Monday settled a case related to alleged violations of mutual funds norms with markets regulator Sebi. Both the entities have paid `90.47 lakh towards settlement charges.

The matter was regarding the downgrading of Ballarpur Industries (BILT) by India Ratings and Research on February 23, 2017. “In view of the aforesaid event, information was sought from all the Mutual Funds seeking details of their exposure(s) in the debt papers of BILT. In the aforesaid context, IDBI Asset Management informed that schemes of IDBI Mutual Fund had not held any investments in securities issued by BILT as on January 31, 2017,” said Sebi in its order.

However, commercial papers (CPs) issued by Bilt Graphic Paper Products Ltd, a subsidiary of BILT, were held by its few schemes of the fund house. The mentioned CPs matured on January 13, 2017 and the issuer, Bilt Graphic Paper had not repaid the principal amount of the said CPs on maturity.

Later, an inspection of IDBI MF was carried out by Sebi in January 2018. On the basis of aforesaid inspection findings and reply of the IDBI Asset Management, Sebi prima facie noted that IDBI Asset Management and IDBI MF Trustee Company had failed  to  comply with the various requirements under the provisions of Mutual Funds  Regulations and Sebi Circulars.

On September 26, 2019, Sebi issued the show cause notice (SCN) to IDBI Asset Management and IDBI MF Trustee Company. Sebi in its circular stated that application dated November 25, 2019, both the entities proposed to Sebi to settle  the instant proceedings, without admitting or denying the findings of fact and conclusions of law, through a  settlement order and filed settlement  applications.

The order also said that the high powered advisory committee in its meeting held on April 01, 2020, considered the settlement terms proposed and recommended the case  for settlement upon payment of Rs 90,47,228 towards settlement charges.

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