New Delhi: Senior Kotak Asset Management Company (AMC) executives, including CEO Nilesh Shah, were fined INR 1.6 crore by the Securities and Exchange Board of India (Sebi) on Thursday for breaking mutual fund regulations by investing in fixed maturity plans of Essel Group firms.
The regulator’s adjudicating officer found shortcomings in the behaviour of the AMC and its personnel in a 104-page adjudicating order on two grounds: prolonging the maturity of papers belonging to the Essel group and failing to exercise due diligence while investing in the Essel group enterprises.
“It is noted that Kotak AMC entered into a contract with Essel Group promoters and other promoter entities to postpone the maturity of various Essel Group firms’ securities until September 30, 2019. In light of the Net Asset Value (NAV), investors in all six schemes did not receive the full amount at maturity, according to Sebi’s order.
The investment plan “made no reference to the financials and operations of the issuers.”
It continued that only the study of the collateral (Zee) served as the basis for the investment decision.
Sebi issued its initial directive on the subject in August of last year.
The fund house intends to challenge the judgement in court.
A spokeswoman for the AMC stated, “In the same instance, Kotak Mahindra Asset Management Company Limited’s appeal is still pending with the Securities Appellate Tribunal.”
Kotak Mahindra Trustee Company, Kotak AMC’s fund managers Lakshmi Iyer, Deepak Agarwal, and Abhishek Bisen, as well as compliance officers Jolly Bhatt and Gaurang Shah—all of whom were a part of the investment committee that approved the investment choices for these fixed maturity plans—were also fined.