ICICI Prudential AMC and its chief Nimesh Shah on November 29 settled a SEBI probe into alleged violation of mutual fund norms over their investments in IPO of the fund house's group firm ICICI Securities.
The fund house has paid Rs 89.96 lakh, while Shah remitted Rs 6.8 lakh towards settlement fees, the SEBI said in an order.
Under the settlement, an entity is allowed to settle charges by paying a penalty without admission or denial of guilt.
"The pending adjudication proceedings initiated against applicants...in respect of the... alleged violations against the applicants namely; ICICI Prudential Asset Management Company (AMC) and Nimesh Shah, are disposed of," the regulator said.
The SEBI had initiated adjudication proceedings in respect of ICICI Prudential AMC as well its Managing Director and CEO Shah for alleged violations of Mutual Fund Regulations while dealing in IPO of ICICI Securities (I-Sec).
It had issued show cause notice in July, 2018 to applicants, wherein it was inter-alia alleged that they are in violation of the provisions of mutual fund norms.
While the adjudication proceedings were in progress, they approached SEBI to settle the case on payment of settlement charges.
Thereafter, the SEBI's high powered advisory committee recommended the case for settlement on the payment of Rs 89.96 lakh for ICICI Prudential AMC and Rs 6.8 lakh for Shah. This was also approved by the regulator's panel of whole-time members, following which they remitted the amount.
Accordingly, the regulator has disposed of the adjudication proceedings initiated against the both entities.
ICICI Prudential AMC is the country's largest mutual fund house with an asset base of over Rs 3.1 lakh crore.
Earlier in July, SEBI found ICICI Prudential MF in violation of rules during the last day bidding for IPO of ICICI Securities and had asked the fund house to pay back Rs 240 crore, with 15 percent interest, to its five schemes from which the money was taken for the shares, sources had said.
Besides, the fund house was asked to pay the investors, who have redeemed their units since allotment of shares in the initial public offer, after calculating the loss incurred by the respective schemes due to fall in the ICICI Securities share price, they added.
In March, ICICI Securities came out with its IPO for 7,72,49,508 shares, with a price band of Rs 519- 520. It had reduced the size of the offer to a little over Rs 3,500 crore after the sale elicited a sluggish response, especially from high net worth individuals.
The share sale of the leading brokerage firm -- which was to raise up to Rs 4,016 crore -- received around 88 percent subscription, including the anchor portion, on the last day of the bidding.
Out of the application for shares worth Rs 640 crore applied by ICICI Prudential MF, Rs 400 crore was applied on the first day of bidding and Rs 240 crore was applied on the last day.
According to sources, the decision to revise bids and make additional bids amounting to Rs 240 crore on the last day is a clear indication of facilitating subscription in the QIB portion so that the issue does not fail.
Further, without the last day subscription by ICICI Prudential MF, ICICI Securities' IPO would have failed and the fund house has thus facilitated its sponsor ICICI Bank to divest its stake in the brokerage house, they had added.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
