New FMPs: SEBI bars Kotak AMC

The SEBI has barred Kotak Mahindra Asset Management Company from launching any new fixed maturity plan (FMP) for the next six months.

A Sebi probe had found that the investors of certain FMPs were not paid their full proceeds based on the declared net asset value of the schemes as on their respective maturity dates.

The regulator further found that the AMC invested in zero coupon non-convertible debentures of insignificant and financially handicapped entities of Essel Group, including Konti Infrapower & Multiventures Pvt. Ltd and Edison Utility Works Pvt. Ltd, a Bloomberg/Quint report said.

The capital market regulator has also imposed a penalty of Rs 50 lakh on Kotak AMC and asked the company to refund a part of the investment management and advisory fees collected from the unitholders of the six FMP schemes.

The refund would be equivalent to the percentage of exposure to the Zero Coupon Non-Convertible Debentures (ZCNCD) of the issuers in the respective schemes as on the date of maturity of the six FMP schemes, along with a simple interest at the rate of 15 per cent per annum from the date of maturity of such schemes till the date of actual payment to the respective unitholders of the said schemes.

The fund house has also been directed to submit a compliance report to the regulator, mentioning therein the details of such payments made to the unitholders of the six FMP schemes.

The SEBI has asked the noticee to complete the exercise of payment of funds to the respective unitholders and submission of compliance report to the abovementioned authority within a period of 45 days from the date of this order. The case pertains to six of the AMC's fixed maturity plans which were due for maturity in April 2019.