New Delhi, Sept. 17 -- Alternative investment fund Indiabulls AIF, its asset manager Indiabulls Asset Management Company, two of the AIF's schemes, and three executives including the CEO of the asset manager have settled allegations of violating AIF regulations with the Securities and Exchange Board of India.

The allegations included pledging one scheme's assets to settle the loans of an investee company, misrepresenting financial information related to the valuation of this scheme, and failing to stick to the concentration limits in one investee company in both the schemes.

In a settlement order issued on September 17, SEBI said that it had initiated adjudication proceedings against the AIF; its schemes Indiabulls Real Estate Fund (IBREF) and Indiabulls Dual Advantage Real Asset Fund (IBDARA); its asset management company; as well as Ambar Maheshwari, Amit Jain and Parth Muria. Maheshwari is now the CEO of Sammaan Asset Management (formerly Indiabulls Investment Management Ltd), and Jain is the VP of Investments and Fund Management at Sammaan.

The entities allegedly committed seven violations.

They allegedly pledged IBDARA's assets to back a loan taken by an investee company; misrepresented financial information related to IBDARA's valuation; and failed to stay under the regulatory limit set on concentration in an investee company across both IBDARA and IBREF schemes.

There were four other allegations listed in SEBI's showcause notice: one, failing to drawdown equal percentage of commitment across all classes of units for the IBDARA scheme; two, failing to ensure proper valuation frequency for both the schemes; three, failing to comply with the deficiency letter dated May 12, 2017, which was issued post an inspection and which directed the fund to conduct valuation of its securities bi-annually; and four, submitting inaccurate information in the compliance test report filed with the trustee.

Pending adjudication proceedings, the seven entities filed a settlement application with SEBI separately in November 2024. In July, SEBI's High-powered Advisory Committee recommended that the case be settled upon payment of Rs 1.43 crore (around $160,000). This was approved by SEBI's panel of whole-time members in August. The applicants informed the regulator, through an email on September 10, that the amount has been remitted.

Published by HT Digital Content Services with permission from VC Circle.