IIFCL Asset Management Settles SEBI Case for ₹1.02 Crore

IIFCL Asset Management Company and four officials settled a case with SEBI, paying ₹1.02 crore to resolve proceedings initiated in June 2023. The case involved alleged violations of mutual fund regulations related to investments in several firms.

author-image
Dil Bar Irshad
New Update
IIFCL Asset Management Settles SEBI Case for ₹1.02 Crore

IIFCL Asset Management Settles SEBI Case for ₹1.02 Crore

IIFCL Asset Management Company and four of its officials have settled a case with the Securities and Exchange Board of India (SEBI) related to alleged violations of mutual fund regulations. The settlement involves paying ₹1.02 crore to resolve the proceedings initiated by SEBI in June 2023.

The four officials named in the case are Emandi Sankara Rao, Prasanna Prakash Panda, Anil Kumar Taneja, and Sumiran Bansal. The alleged violations pertain to investments made by IIFCL AMC in several firms, including GVR Infra Pvt Ltd, DP Jain & Co Infrastructure, DPJ-DRA Tollways, Feedback Energy Distribution Company Ltd, and Feedback Infra Pvt Ltd.

Why this matters: This settlement highlights the importance of regulatory oversight in the financial sector, ensuring that asset management companies comply with mutual fund regulations to protect investors' interests. This settlement highlights the importance of regulatory oversight in the financial sector, ensuring that asset management companies comply with mutual fund regulations to protect investors' interests. It also emphasizes the need for transparency and accountability in investment decisions, which can have a ripple effect on the entire economy.

SEBI alleged that IIFCL AMC "failed to ensure security creation, did not obtain NOC from all existing lenders, and failed to charge penal interest for conditions defined as 'event of default' in the Debenture Trust Agreement" in relation to its investment in DP Jain & Co Infrastructure. Additionally, SEBI alleged that "equity shares of Feedback Highways OMT, which were supposed to be pledged, had not been pledged, and all investments, including in IL&FS, pending deployment of funds, were contrary to the PPMs of the schemes."

The AMC and its officials proposed to settle the proceedings without admitting or denying the findings of facts through a settlement order. As part of the settlement terms, they agreed to remit a total of ₹1.02 crore and ensured that the amount would not be borne by unit holders of the schemes of IIFCL Mutual Fund.

The settlement proposal was approved by SEBI's internal committee in November 2023 and the High Powered Advisory Committee in December 2023. The settlement order was passed on April 30, bringing closure to the proceedings that were initiated nearly a year ago.

IIFCL Asset Management Company is a part of India Infrastructure Finance Company, which was set up by the Government of India to boost infrastructure investment in the country. In August 2011, SEBI issued guidelines for Infrastructure Debt Funds - Mutual Funds, following which IIFCL Mutual Fund launched long-term infrastructure debt funds with a minimum investment requirement of ₹1 crore and a minimum unit size of ₹10 lakh.

The settlement of this case highlights the importance of strict compliance with mutual fund regulations and the need for asset management companies to exercise due diligence in their investment decisions. It also highlights SEBI's role in enforcing these regulations and maintaining the integrity of the Indian securities market.

Key Takeaways

  • IIFCL AMC and 4 officials settle case with SEBI for ₹1.02 crore.
  • Case related to alleged violations of mutual fund regulations.
  • Violations included failure to ensure security creation and non-compliance with investment agreements.
  • Settlement emphasizes importance of regulatory oversight and transparency in investment decisions.
  • SEBI's role in enforcing regulations maintains integrity of Indian securities market.