PGIM India Mutual Fund's former CEO Rajesh Iyer settles inter-scheme transfers case with Sebi

Rajesh Iyer, former CEO of PGIM India Mutual Fund, on Thursday, settled with Sebi a case related to flouting of mutual fund rules in executing inter-scheme transfers after paying Rs 16.57 lakh towards the settlement amount.

The order came after Iyer filed an application with the Securities and Exchange Board of India (Sebi) in June to settle the alleged violations under the settlement rules.

"The instant proceedings initiated against the applicant vide Show Cause Notice dated April 13, 2022, are disposed of," Sebi said in its settlement order.

The regulator had initiated adjudication proceedings against Iyer and issued a show cause notice to him in April 2022 after finding a violation of mutual fund rules.

Sebi carried out a thematic inspection on Inter-Scheme Transfers (ISTs) of downgraded debt securities of PGIM India Mutual Fund for the period of August 2018 to February 2019.

In its inspection, Sebi observed that Iyer was the Chief Executive Officer (CEO) of PGIM Mutual fund during the period from March 21, 2018, to October 5, 2018, and that PGIM Mutual Fund had executed certain ISTs from open-ended to closed-ended schemes and vice versa, without recording the correct rationale, or based on the supporting research report among others.

Therefore, it was observed that the applicant, as the CEO of PGIM Mutual Fund, violated the provisions of mutual fund rules, Sebi said in its order.

In July 2022, the markets regulator imposed a penalty totaling Rs 36 lakh on five entities, including PGIM Asset Management Company, for flouting mutual funds norms while executing Inter-Scheme Transfers.

Apart from the asset management firm, the regulator had penalized its chief executive officer Ajit Menon and three others -- Kumaresh Ramakrishnan, Puneet Pal, and Rakesh Suri. These three were the fund managers at the time of the violation.

Sebi levied a fine of Rs 25 lakh on PGIM AMC, Rs 5 lakh on Menon, and Rs 2 lakh each on Ramakrishnan, Pal, and Suri.

Later in August 2022, the Securities and Appellate Tribunal (SAT) stayed the Sebi's order.