Markets regulator Sebi has imposed a fine of Rs 10 lakh on Oxus Investments, founded by noted economist Surjit Bhalla, for carrying out unregistered portfolio manager services. The Sebi order named Bhalla, a member of the newly constituted Economic Advisory Council to Prime Minister, as a director at Oxus Investments Pvt Ltd. While repeated queries sent to Bhalla for his comments on the Sebi’s order, dated December 20, remained unanswered, he had tweeted on December 14, “…My portfolio investment firm, Oxus Fund Management, ceased operations, closed shop in October 2016”.
The tweet was in reply to another tweet, wherein an individual had raised “doubt” whether it was not a conflict of interest as Bhalla was running a portfolio investment firm and was also on the EAC-PM. Various websites including leading think tank NCAER described Bhalla as “chairman of Oxus Investments, a New-Delhi based hedge fund and emerging markets advisory firm. An order passed passed by Sebi said yesterday that Oxus Investments continued acting as a portfolio manager even after expiry of its registration.
The company was authorised to provide portfolio manager services from July 16, 2013 to July 15, 2016. After expiry of its licence, it submitted an application for renewal of the PMS registration on July 19 last year. Moreover, Oxus Investments continued to carry out its activity as portfolio manager three months after the expiry of the registration despite receiving letters from Sebi asking the it to stop the activities. “The noticee (Oxus Investments) did not provide information sought even after repeated reminders sent through letters and emails, except a letter providing zero AUM and client as on November 24, 2016.
“Further, as no documents are available to substantiate the fact that the clients have been repaid their proportionate funds and no new investors have been taken on board after the expiry of the registration of the noticee,” Sebi said. Under the Sebi rules, portfolio managers need to make an application for renewal three months before the expiry of its licence. If the application is made after the expiry of the registration, it is considered as a fresh application.
“I conclude that the noticee by continuing to carry out the activity of a portfolio manager even after expiry of its certificate of registration, has acted as an unregistered portfolio manager which is in violation of the provisions of ….the PM (portfolio manager) Regulations,” Sebi General Manager and Adjudicating Officer D Sura Reddy said. Accordingly, Securities and Exchange Board of India (Sebi) has levied a fine of Rs 10 lakh on Oxus Investments.