Axis AMC, Axis MF Trustee pay Rs 16.57 lakh to settle allegations of violation of SEBI norms

Pending adjudication proceedings, the AMC and the trustee filed an application with SEBI to settle the proceedings initiated against them.

Axis Asset Management Company (Axis AMC) and Axis Mutual Fund Trustee Ltd has paid Rs 16.57 lakh to settle allegations of violation of a SEBI circular on total expense ration (TER) and Mutual Fund Regulations.

According to a settlement order issued by the Securities and Exchange Board of India (SEBI) on November 26, a showcause notice had been issued to the AMC "as it has incurred the excess expenses of the mutual fund scheme" and had allegedly violated  the provisions of Clause A(1) of SEBI Circulars dated October 22, 2018. A notice was issued to the trustree for not ensuring the compliance of the AMC with the SEBI circular cited above, which led to the trustee allegedly violating provisions under the SEBI (Mutual Funds) Regulations.

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Clause A (1) of the SEBI Circular has to do with the transparency in the Total Expense Ratio, which is a measure of expenses incurred in the managing of an investment fund.

The Clause A (1) reads: "In terms of Regulation 52(1) of SEBI (Mutual Funds) Regulations, 1996, all scheme related expenses including commission paid to distributors, by whatever name it may be called and in whatever manner it may be paid, shall necessarily be paid from the scheme only within the regulatory limits and not from the books of the Asset Management Companies (AMC), its associate, sponsor, trustee or any other entity through any route."

Pending adjudication proceedings, the AMC and the trustee filed an application with SEBI to settle the  proceedings initiated against them, without admitting or denying the findings of facts and conclusions of law. The application was dated June 4, 2024.

After the deliberations by the Internal Committee of SEBI and the High Powered Advisory Committee, the Panel of Whole-time Members of SEBI approved the settlement terms on November 6 and this was communicated to the AMC and the trustee on November 13.