Emerging India Focus Funds pays Rs 64 lakh to settle FPIs violation case with Sebi

Emerging India Focus Funds, a foreign portfolio investor (FPI), on Monday settled a case related to alleged violations of FPI rules with capital market regulator Securities and Exchange Board of India (Sebi) by paying a sum of Rs 64.35 lakh as settlement charges. The development follows an application filed by the company with Sebi, proposing to settle the proceedings initiated against it, "without admitting or denying the findings of facts and conclusions of law" through a settlement order.

"For avoidance of doubt, the case that has been settled with Emerging India Focus Funds (EIFF) has nothing to do with the Adani or Hindenburg report-related enforcement actions undertaken by SEBI. Specifically, this case does not form a part of the 24 cases that were reported to the Expert Committee set up by the Hon’ble Supreme Court after the Hindenburg Report of January 2023," according to sources. 

Emerging India Focus Funds was one of the entities named in US-based short-seller Hindenburg Research's report against the Adani group. The conglomerate has denied the charges. 

Sebi had initiated adjudication proceedings against Emerging India Focus Funds and issued a show cause notice to it in February over alleged violations of the FPI Regulations and Intermediaries Regulations.

Pending adjudication proceedings, Emerging India Focus Funds filed an application with Sebi and shelled out Rs 64.35 lakh on November 13 to settle the alleged violations.

"In view of the acceptance of the settlement terms and the receipt of settlement amount ...By Sebi, the instant adjudication proceedings initiated against applicant vide SCN (showcause notice) dated February 29, 2024, is disposed of," a Sebi order read.

In April 2022, the Mauritius Financial Services Commission, the island country's financial regulator, had revoked the license of the controlling shareholder of Emerging India Focus Funds (EIFF). 

As per Sebi rules, individuals holding controlling interest in an FPI should be "fit and proper".

After the action by the Mauritian regulator, this was no longer the case.

However, EIFF replaced the controlling shareholder with a new "fit and proper" entity in April 2023. 

Between April 2022 and April 2023, therefore, EIFF was in breach of SEBI regulations, and a show cause notice was duly served on them.

This has now been duly settled. 

Since November 2021, EIFF has only invested in mutual funds in India.