SEBI has disposed adjudication proceedings against Kotak MF relating to alleged violation of various SEBI norms such as parking of money from a scheme in short term deposits of HDFC Bank, which invested in that scheme, maintaining invalid email ids and calculating NAV of gold ETF inappropriately.
The alleged violation was found during SEBI audit conducted between April 2014 and March 2016.
On inspection, SEBI found that the bank purchased units of the scheme after the fund house had parked money in short term deposits. Also, the amount that fund house had parked and the bank had invested does not match. Hence, the market regulator has not imposed any charge on the fund house.
SEBI norms say that fund houses cannot park scheme’s corpus in short term deposit of a bank, which has invested in that scheme to prevent round tripping of funds. In fact, the market regulator has asked AMFI members to take corrective actions to ensure compliance with these norms.
Further, while SEBI found that most email ids were valid, the market regulator pointed out investors have seen a total difference of Rs.2103 due to error in cutting off time. Since these findings did not cause any loss to unit holders, SEBI has disposed of the matter.
Earlier, SEBI had issued show cause notice to the fund house. SEBI clarified that the show cause notice is flawed and without jurisdiction as it merely seeks to reopen the case without showing anything as to what is erroneous and how such error leads to the adjudication officer order being against the interest of the securities market.
