CG Power financial fraud stumps mutual funds, poses risks for industry

Fund managers seek clarity from new management on potential recovery

The mutual fund (MF) industry is grappling with troubles in another exposure. While the exposure levels are not as large as some of the other stressed investments, the disclosure of employees-led financial fraud at CG Power and Industrial Solutions (CGPIL) poses a different set of risks for the industry. 

As many as 20 MF schemes had equity exposure to CGPIL. The latter's share price declined 20 per cent, leading to mark-to-market hit on these schemes' CGPIL exposure. 

According to sources, fund managers are seeking clarity from the company's new management on potential recovery of funds routed out of the company.