Srei Multiple Asset Investment Trust and Srei Alternative Investment Managers have settled a probe by markets regulator Sebi into alleged violation of alternative investment fund (AIF) rules after paying Rs 1.18 crore towards settlement fee.
Sebi agreed to settle proposed adjudication proceedings in the case, pertaining to allegedly using part of contribution of investors for the purpose of giving loans, after it was approached by the two entities with a plea under the settlement regulations.
"The pending proceedings... for the default is settled," Sebi said in a settlement order passed yesterday adding it would not initiate any enforcement action against the two entities for the alleged defaults.
Under the settlement, an entity is allowed to settle charges by paying a penalty without admission or denial of guilt.
The markets regulator had initiated the proceedings and issued a show cause notice to Srei Multiple Asset Investment Trust and Srei Alternative Investment Managers for allegedly using part of contribution of investors for the purpose of giving loans and thereby violating AIF norms.
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Pending adjudication proceedings, the entities approached Sebi to settle the case on payment of settlement charges.
Thereafter, Sebi's high powered advisory committee recommended the case for settlement on the payment of Rs 1.18 crore along with an undertaking by the entities that amounts given as loans were received back and in future there will be no loan activity.
This was also approved by the regulator's panel of whole-time members, following which they remitted the amount. Besides, they gave an undertaking "confirming that they have stopped granting loans from March 1, 2016, the amounts given as loans have been received back and in future, there will be no loan activity."
Accordingly, the regulator has disposed of the adjudication proceedings initiated against the entities.
It further said that enforcement actions, including restoring or initiating the proceedings, could be initiated if any representation made by them is found to be untrue.
In November 2017, Sebi had slapped a fine of Rs 30 lakh on Srei Alternative Investment Managers and Srei Multiple Asset Investment Trust for violating rules pertaining to alternative investment fund.
The regulator had found that Srei Alternative Investment Managers, sponsor of the fund -- Srei Multiple Asset Investment Trust -- failed to have a minimum required continuing interest in the fund in the form of capital commitment and thereby violated AIF Regulation.
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