Mumbai: The Securities and Exchange Board of India has barred Kotak Asset Management Company from launching any new fixed maturity plan (FMP) scheme for six months and also imposed a fine of Rs 50 lakh for failure to exercise due diligence and disclose information having a negative impact on the six FMP schemes to its investors on time.
Kotak AMC has also been directed to refund a part of the investment management and advisory fees collected from the unitholders of the six FMP schemes. has also been directed to refund a part of the investment management and advisory fees collected from the unitholders of the six FMP schemes.
"Sebi noticed that the investors of certain FMP launched by the Kotak Mahindra Mutual Fund were not paid their full proceeds based on the declared net asset value (NAV) of the said schemes as on their respective maturity dates," said a Sebi order issued on Friday by its whole time member S. K. Mohanty.
Sebi found six FMPs of the fund house where payment were delayed.
All the six FMP schemes launched by Kotak AMC had matured during April-May 2019 wherein the fund house was required to repay the investors immediately thereafter. However, due to extension of maturity of non-convertible debentures (NCDs) of certain issuers belonging to Essel Group, the total asset under management of the six FMP schemes could not be realised by the fund house and a part of the amount was paid at a later stage in two instalments in the month of September 2019.
A Kotak Mahindra Group spokesperson on Friday said, “The Sebi order dated 27th August 2021 on KMAMC, pertains to six FMP schemes that matured in April and May 2019, which held investments in non-convertible debentures issued by Edisons Utility Works Pvt Ltd and Konti Infrapower & Multiven-tures Pvt Ltd, belonging to the Essel Group and secured by pledge of equity shares of Zee Entertainment Enterprises Ltd. All the investors have been fully repaid along with applicable interest in September 2019. KMAMC is committed to protecting investor interest at all times.”
The Sebi order said, "The noticee, instead of carrying out a due diligence process in an objective and professional manner by examining the financials, their payment capacity and other antecedents of the issuers in granular details, has instead heavily relied upon the secondary factors such as the reputation and past history of Essel Group and entirely depended on the collateral cover which also eventually proved to be grossly inadequate to recover its outstanding investment."