Invesco Mutual Fund pays ₹5 crore to SEBI to settle inter-scheme transfer case

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Invesco Asset Management, led by its CEO Saurabh Nanavati and four others, has reached a resolution with the Securities and Exchange Board of India (SEBI) regarding alleged breaches of mutual fund and portfolio management regulations.

Under SEBI’s settlement framework, the asset management company and the involved parties have collectively agreed to pay ₹4.98 crore.

According to the SEBI order, after the receipt of Settlement Applications, the Authorised Representatives of the Applicants held a meeting with Sebi’s Internal Committee (referred to as ‘IC’) on January 19, 2024.

During this meeting, the terms of settlement were discussed.

The IC considered the factors outlined under Regulation 10 and Schedule II of the Settlement Regulations. Subsequently, the Applicants were permitted to submit revised terms of settlement and an undertaking that the settlement amount would not be borne by the investors/unitholders.

Accordingly, the Applicants submitted Revised Settlement Terms via a letter dated January 23, 2024, proposing a settlement amount of ₹4,98,55,000 jointly and severally.

The investigation focuses on the scrutiny of Invesco Asset Management’s mutual funds and portfolio management services (PMS) operations during October and November 2021.

SEBI observed a lack of distinct separation between the portfolio management and MF activities within the firm during the 2021 examination.

Additionally, the PMS division lacked sufficient resources and infrastructure, failing to maintain a clear delineation from the mutual fund business.

SEBI noted, “Inter-scheme transfers were executed, and there were movements of securities/pre-arranged trades/layered trades between schemes of Invesco MF and PMS Advisory, violating the provisions of SEBI (Mutual Funds) Regulations. It is alleged that this scheme of things constitutes ‘unfair trade practice’.”

In response, the asset management company assured SEBI that comprehensive measures have been implemented to prevent the recurrence of similar infractions in the future.

This development follows the recent announcement of Hinduja Group’s IndusInd International Holdings entering the asset management sector through the acquisition of a majority stake in Invesco Asset Management (India), a subsidiary of the US-based Invesco.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow