L&T Mutual Fund, former officials pay Rs 1.1 crore to settle case with Sebi

L&T Investment Management , now merged with HSBC Mutual Fund, its former chief executive Kailash Kulkarni, and three other former senior officials have agreed to pay Rs 1.1 crore to the Securities and Exchange Board of India(Sebi) to settle charges of unfair treatment of investors during inter- scheme transfers.

“L&T Investment Management Limited..failed to avoid conflicts of interest in managing the affairs of the schemes and to keep the interest of all unitholders paramount in all matters; failed to carry out the business and invest in accordance with the investment objectives stated in the offer documents and take investment decisions solely in the interest of unitholders; and failed to render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgment,” Sebi said in its settlement order on Friday.

The regulator had conducted an examination on inter- scheme transfers of L&T Mutual Fund for the period of April 1, 2017, to June 30, 2018.

Sebi alleged that L&T Investment Management failed to ensure that the transfers of investments from one scheme to another scheme were allowed only if such transfers were done at the prevailing market price for quoted instruments on spot basis and that the securities so transferred should be in conformity with the investment objective of the scheme to which such transfer had been made.

It also alleged that the fund house failed to ensure that valuation of its investments must allow fair treatment to all investors including existing investors as well as investors seeking to purchase or redeem units of mutual funds in all schemes at all points of time; the valuation of investments should be based on the principles of fair valuation.

“It was observed that Kailash the CEO of the AMC, failed to ensure that the Mutual Fund complied with all the provisions of MF Regulations and the guidelines or circular issued in relation therein and that the investments made by the fund managers are in the interest of the unit holders,” Sebi said.

The regulator said it observed that Shriram Ramanathan, Vikas Garg and Jalpan Shah also failed to ensure that the funds of the schemes were invested to achieve the objectives of the schemes and in the interest of the unit holders.

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