New Delhi, Apr 21 (PTI) Motilal Oswal Alternative Investment Trust and its investment manager Motilal Oswal Asset Management Company and have settled a case with Sebi pertaining to alleged violations of alternative investment funds (AIF) norms after paying Rs 38.76 lakh.
The two entities filed suo-motu settlement applications with Sebi, proposing to settle the alleged violations by “neither admitting nor denying the findings of facts and conclusions of law”.
The case related to Motilal Oswal Alternative Investment Trust (AIF) and Motilal Oswal AMC facing regulatory concerns regarding their treatment of defaulting investors, distribution, and servicing.
In its order passed on Monday, the regulator observed that the AIF retained Rs 8.69 crore from 109 defaulting investors out of Rs 35.17 crore paid by them, against a total commitment of Rs 115 crore.
The retained amount is nearly 25 per cent of the funds actually paid by these investors and includes taxes collected and remitted to the government.
Sebi also noted that Motilal Oswal AMC appropriated the penal exit load charged to defaulting investors instead of crediting it to the respective scheme for the benefit of non-defaulting investors.
Moreover, in one instance, a lack of coordination among the distributor, customer service and operations teams caused an investor to be wrongly classified as a defaulter, resulting in the liquidation of her portfolio. Though the account was later reinstated after payment of the remaining amount, Sebi said there was a deficiency in investor service.
Further, the regulator alleged that the AIF did not have a documented process governing distributors, including a code of conduct or a framework for action against them. No action was taken against distributors in cases of investor defaults or alleged mis-selling highlighted in SCORES complaints.
Accordingly, the two entities allegedly violated AIF rules, Sebi added.
The applicants filed the present applications to settle proceedings that may be initiated against them for the alleged violations. Following receipt of the settlement applications, Sebi’s committee recommended that the applicants pay Rs 38.76 lakh.
Accordingly, the applicants remitted the amount.
“It is hereby ordered that any proceedings that may be initiated for the violations… are settled in respect of the applicants,” Sebi said.
