IIFCL AMC, 4 others settle mutual fund violation case with Sebi; pay Rs 1 crore

IIFCL Asset Management Company along with four individuals have settled with Sebi a case pertaining to alleged violation of mutual fund norms after paying Rs 1.02 crore collectively towards settlement charges.

The four individuals who settled the case are -- Emandi Sankara Rao, Prasanna Prakash Panda, Anil Kumar Taneja and Sumiran Bansal.

The entities allegedly violated mutual funds norms with respect to investment made by IIFCL AMC in several firms such as GVR Infra Pvt Ltd, DP Jain & Co Infrastructure, DPJ-DRA Tollways, Feedback Energy Distribution Company Ltd and Feedback Infra Pvt Ltd, according to a settlement order passed by Sebi on April 30.

Pending adjudication proceedings, the entities filed settlement applications with Sebi proposing to settle the alleged regulatory violations case against them,"without admitting or denying the findings of facts and conclusions of law, through a settlement order".

After the entities remitted the settlement amount of Rs 1.02 crore and agreed on Sebi's condition that the amount would not be borne by unit holders of the schemes of IIFCL Mutual Fund, Sebi settled the proceedings initiated against them through a show cause notice issued in June 2023.

With respect to investment in DP Jain & Co Infrastructure, Sebi, in its show cause notice, alleged that the AMC failed to ensure the security creation, did not obtain NOC from all the existing lenders, failed to charge penal interest for conditions defined as "event of default" in the Debenture Trust Agreement and there was a shortfall in pledge of shares by the company.

In the case of investment in Feedback Infra, the regulator alleged that equity shares of Feedback Highways OMT which was supposed to be pledged, had not been pledged and all investments including in IL&FS, pending deployment of funds, were contrary to the PPMs (Private Placement Memorandums) of the schemes.