Rs 50-lakh fine on Kotak Mahindra AMC; can’t launch FMP schemes for 6 months

NEW DELHI: The Securities and Exchange Board of India (Sebi) on Friday barred Kotak Mahindra Asset Management Company Limited from launching any new fixed maturity plan (FMPs) for the period of six months. The market regulator, which examined the case of delayed payments made in these six FMP schemes to their unit holders in 2019, also imposed a monetary penalty of Rs 50 lakh on the company for violation of the provisions of Sebi Act, MF Regulations, 1996.

According to Sebi, the six FMP schemes were due for maturity in around April-May 2019, but Kotak AMC had failed to make full redemptions to its investors at the time of schemes’ maturities because the said schemes had invested in Essel group, which was the promoter of Zee Entertainment Enterprises and some other companies and these companies had defaulted on their payments.

The fund house only paid the investors fully by September 2019 in violation of various Sebi norms. Kotak AMC has now been asked to refund part of the fee collected from investors for investment management and advisory with a 15% interest per annum. The interest would be calculated from FMP maturity to the date of actual payment.