Two Edelweiss entities have settled with market regulator Sebi a case of alleged violation of alternative investment fund rules after collectively paying Rs 61.4 lakh towards settlement charges.
Apart from the settlement amount, Edelweiss Stressed and Troubled Assets Revival Fund Trust and Edelweiss Alternative Asset Advisors Ltd were directed by Sebi that the officers-in-default will not engage with the company for 12 months.
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'...the instant adjudication proceedings initiated against the noticees, Edelweiss Stressed and Troubled Assets Revival Fund Trust and Edelweiss Alternative Asset Advisors Ltd, vide show cause notice dated July 12, 2024, are hereby disposed of,' Sebi's adjudicating officer Sudeep Mishra said in the order on Tuesday.
The order came after two settlement applications were filed by the entities, proposing to settle instant proceedings initiated against them vide SCN on July 12, 2024, without 'admission or denial of the findings of fact and conclusions of law'.
The case stemmed from complaints lodged on SCORES, Sebi's online grievance platform, where lapses in governance and conflict management were alleged against the Edelweiss-managed Alternative Investment Fund (AIF).
According to the regulator, Edelweiss Stressed and Troubled Assets Revival Fund Trust failed to act in the interest of investors, not exercising independent professional judgment, and thereby flouted Sebi's norms.
Sebi noted that Edelweiss Alternative Asset Advisors failed to carry out activities of AIF in accordance with PPM, and submitted inaccurate information to the trustee in the compliance test report of FY 2016-17, thereby violating AIF regulations.
Thereafter, a show-cause notice (SCN) was issued on July 12, 2024, by Sebi against the entities.
Following the applications, the company filed revised settlement terms, which were approved by Sebi's high-powered advisory committee.
Subsequently, the entities paid the settlement amount, which was confirmed by the regulator.
Edelweiss has also informed Sebi that corrective steps had been undertaken, including the creation of a fund board with independent members, a governance committee to monitor conflict situations and a one-year ban on officers-in-default from associating with the company.
Sebi, however, noted that the settlement would be without prejudice to the regulator's right to reopen the matter if disclosures are found to be false or incomplete.
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