SEBI has disposed of enforcement proceedings against a Category III Alternative Investment Fund (AIF) manager for lapses in disclosing continuing interest, following a settlement where the respondent paid ₹9.37 lakh without admission of guilt.
SEBI Allows Settlement in AIF Disclosure Violation Case
SEBI has concluded enforcement proceedings against a Category III Alternative Investment Fund (AIF) manager for failure to disclose continuing interest in a portfolio company, after the respondent opted for settlement under Regulation 15A of the SEBI (Settlement) Regulations, 2014. A settlement sum of ₹9,37,500 was accepted without any admission or denial of the allegations.
The violation pertained to non-disclosure of material economic interest held by the fund manager or its associates in an investee company, contrary to the disclosure obligations under Clause 12 of the AIF Regulations, 2012. SEBI observed that such omissions undermine investor transparency and the integrity of informed decision-making, particularly in Category III funds that employ complex strategies including leverage.
For fund managers, this reinforces the need for rigorous internal compliance mechanisms to track and disclose continuing interests. The settlement route offers a pragmatic resolution but does not absolve future scrutiny. Legal advisors must ensure periodic audits of disclosure templates and reinforce protocols around materiality thresholds and reporting timelines.
Citations
- SEBI (Settlement) Regulations, 2014, Regulation 15A
- SEBI (Alternative Investment Fund) Regulations, 2012, Clause 12
