Indiabulls AMC, Others Settle AIF Rules Violations Case with Sebi; Pays ₹1.43 Cr

Erstwhile Indiabulls Asset Management Company (now known as Groww AMC), its schemes and former officials on Wednesday settled a case with Sebi pertaining to alleged violations of alternative investment fund rules after collectively paying ₹1.43 crore.

Those who settled the case are Indiabulls AIF, Indiabulls Dual Advantage Real Asset Fund (IBDARA), Indiabulls Real Estate Fund (IBREF), Ambar Maheshwari, Amit Jain and Parth Muria, according to a Sebi order.

The case pertains to applicants allegedly violating the AIF Regulations way back in 2017.

In 2023, Indiabulls AMC was acquired by fintech firm Groww. It had three business verticals -- mutual fund business, alternative investment fund business and portfolio management business.

"In view of the acceptance of the settlement terms and the receipt of the settlement amount (₹1.43 crore)...by Sebi, the instant adjudication proceedings initiated against the applicants vide SCN (show cause notice) dated September 26, 2024, are disposed of...in terms of...Settlement Regulations," the markets regulator said.

The latest ruling came after the entities filed applications with Sebi proposing to settle the instant proceedings initiated against them, "without admitting or denying the findings of facts and conclusions of law, through a settlement order".

Before this, the Securities and Exchange Board of India (Sebi) had initiated adjudication proceedings in the matter of inspection of Indiabulls AIF against these entities and issued show cause notices to them in September 2024.

Sebi, in its show cause notices, alleged that applicants pledged IBDARA scheme assets for a loan taken by an investee company; failed to draw down an equal percentage of commitment across all classes of units for the IBDARA scheme; failed to adhere to concentration limits in an investee company in case of both schemes IBREF and IBDARA; and failed to ensure proper valuation frequency of investments for both the schemes IBREF and IBDARA.

The regulator alleged that applicants misrepresented the financial information and disclosed inaccurate financial information related to valuation of IBDARA scheme to the investors; failed to comply with the deficiency letter dated May 12, 2017, issued post inspection held in FY 2015 advising the fund to conduct valuation of its securities bi-annually and submitted inaccurate information in the CTR (Compliance Test Report) filed with the trustee.