ICICI Prudential MF, MD & CEO Nimesh Shah settle IPO case with Sebi

Last-day bid in ICICI Securities' public offering was seen as a move to ensure IPO does not fail

The adjudication proceedings conducted by the Securities and Exchange Board of India (Sebi) into ICICI Prudential MF’s alleged violations of Sebi’s code of conduct was settled on Thursday. 

The regulator said it had accepted payment of Rs 8.9 million made by the fund house, and another Rs 680,000 by its Managing Director and Chief Executive Officer Nimesh Shah as part of the settlement terms.  

ICICI Prudential MF had bid twice in the ICICI Securities IPO that had hit the capital market earlier in March. 

The allegation levelled against the fund house was that the last-day bid made by the fund house was to ensure that the IPO does not fail, which was not necessarily keeping in mind the best interests of the unitholders of the schemes that were involved. 

The fifth schedule of Sebi’s MF regulations states: “Mutual fund schemes should not be organised, operated, managed or the portfolio of securities selected in the interest of sponsors, directors of asset management companies, members of Board of trustees or directors of trustee company, associated persons in the interest of special class of unitholders, other than in the interest of all classes of unitholders of the scheme.”   Besides the fifth schedule’s first para, the alleged violations were in breach of regulation 25 (1) and 25 (2), which pertain to following due diligence while taking investment decisions. 

The settlement order read, “This settlement order disposes of the said pending adjudication proceedings in respect of applicants as mentioned above. This settlement order is without prejudice to the right of Sebi to take enforcement actions including initiating or reopening the proceedings against the applicant for which settlement order was passed against applicant, if any representation made by applicants in the settlement proceedings is subsequently found to be untrue; or applicants breaches any of the clauses/ conditions of undertakings/ waivers filed during the current settlement proceedings.”