5 entities settle AIF rule violation case with Sebi

New Delhi: Five entities settled a case with Sebi pertaining to breach of investment limit by Kotak Optimus Moderate Scheme that led to flouting of Alternative Investment Fund (AIF) rules. They paid Rs7.87 lakh jointly in November 2023 to settle the matter, the Securities and Exchange Board of India (Sebi) said in its settlement order passed on January 30. Consequently, the regulator “ordered that the specified proceedings in respect of which the notice was issued are hereby settled in respect of the applicants (five entities)’.

Those who settled the case with Sebi are -- Kotak Alternate Assets Fund III, Kotak Alternate Asset Managers Ltd, Shobhit Mathur, Parag Sukhija and Gaurav Aggarwal. The order came after the applicants proposed to settle the enforcement proceedings that may have been initiated against them for violation of AIF regulations.

The regulator observed that Kotak Optimus Moderate Scheme of Kotak Alternate Assets Fund III (AIF) was in breach of the concentration limit of 10 per of investable funds in a single investee company, Indian Railway Financial Corporation Ltd, from May 13, 2022 to July 11, 2022, as per the settlement order.

The breach was in non-compliance with AIF rules, it added. Going by the order, the regulator had issued a notice of summary settlement in October 2023 to the AIF, its manager and the key managerial personnel, intimating them that the relevant provisions of AIF regulations have been violated on account of the breach of the concentration limit.