Nippon India AIF Entities Settle SEBI Case Over Alleged AIF Regulations Violations

Nippon India Event Opportunities Trust, Nippon Life India AIF Management Limited and several of its key managerial personnel have settled a case with the Securities and Exchange Board of India (SEBI) by paying ₹14.66 lakh over alleged violations relating to the manager's and sponsor's continuing investment in an alternative investment fund.

The settlement order was passed by SEBI Whole Time Members Kamlesh C. Varshney and K.V.R. Murty.

The proceedings arose from SEBI's examination of the Quarterly Activity Report of Nippon India Equity Opportunities AIF – Scheme 9 for the quarter ended June 2024.

SEBI observed that while the fund had drawn down ₹93.05 crore from investors against total commitments of ₹215.36 crore, resulting in a 43.2% drawdown, the manager and sponsor had drawn only ₹3 crore against their commitment of ₹10 crore, amounting to a 30% drawdown. Similar discrepancies were also noticed for the quarters ended March 2024 and September 2024.

According to SEBI, this resulted in violations of the AIF Regulations and the Master Circular for AIFs dated May 7, 2024, as the sponsor and manager allegedly failed to maintain their continuing interest pro-rata to the net funds drawn from other investors.

The regulator then issued Notices of Summary Settlement to the fund, the manager and the key managerial personnel, offering them an opportunity to settle the proposed enforcement proceedings upon payment of a settlement amount. The applicants thereafter filed a summary settlement application and remitted ₹14.66 lakhs, which was confirmed by SEBI.

Accepting the settlement application, SEBI ordered that no enforcement action would be initiated against the applicants for the alleged violations covered by the settlement. However, it clarified that the settlement is without prejudice to its right to initiate appropriate action if any representation made during the settlement proceedings is found to be untrue, the applicants breach the settlement terms, or any discrepancy in the settlement amount.