L&T MF, former officials pay Rs 1.15 crore to settle SEBI case on lapses in inter-scheme transfers

SEBI SETTLEMENT ORDER

Erstwhile L&T Mutual Fund and four of its officials, including ex-CEO Kailash Kulkarni, settled a case related to alleged lapses in inter-scheme transfers after paying Rs 1.15 crore to the Securities and Exchange Board of India.

Based on the thematic inspection of inter-scheme transfer of securities at L&T Mutual Fund from April 1, 2017, to June 30, 2018, it was observed that the fund house failed to avoid conflicts of interest in managing the affairs of the schemes and to keep the interest of all unitholders paramount in all matters, SEBI said in the settlement order issued on February 17.

“…(L&T Investment Managers) failed to carry out the business and invest in accordance with the investment objectives stated in the offer documents and take investment decisions solely in the interest of unitholders; and failed to render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgment,” the market regulator said.

Apart from L&T Investment Management and Kulkarni, Shriram Ramanathan, who was head of fixed income investment, and former fixed income portfolio managers Vikas Garg and Jalpan Shah proposed to settle the proceedings against them without admitting or denying the findings and conclusions.

L&T Investment Management paid Rs 57.03 lakh towards settlement charges and the others paid Rs 14.63 lakh each. They informed SEBI about the remittance of the settlement amount by emails dated February 9-10, 2023.

The AMC also allegedly failed to ensure that the valuation of its investments allowed fair treatment to all investors including existing ones and those seeking to purchase or redeem units.

SEBI said in the order that the AMC officials failed to ensure that the mutual fund complied with mutual fund regulations and that investments made were in the interest of unit holders.

HSBC Mutual Fund took over the operations of L&T Mutual Fund to make it the 14th-biggest fund house in India. The merger of the schemes of L&T Mutual Fund with those of HSBC MF took place in November 2022.