SEBI imposed penalties on two AMCs - Kotak AMC and PGIM India AMC. Kotak AMC was fined Rs. 1.6 crores for failing to disclose plans around extending maturities of debt schemes invested in Essel Group companies. PGIM India AMC's CEO and fund managers were fined for inter-scheme transfers of stressed and high-quality securities between open and closed-ended schemes during a credit crisis. Nippon India MF suspended inflows into five international fund schemes due to depleted headroom following high FPI sales in 2022, which have reached a record Rs. 2.1 lakh crore for the first half of the year.

1. Weekly
News
4th July 2022
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SEBI Registered Investment Adviser (INA200006628)

2. Snapshot
SEBI Fines Kotak AMC
a penalty of Rs. 1.6
crores
SEBI Fines PGIM AMC
for Inter Scheme
Transfers
Nippon India AMC
Stops Inflows in 5
International Schemes
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© RightFocus Investments Pvt. Ltd.
SEBI Registered Investment Adviser (INA200006628)
FPI Sales in the 1st Half
of CY 22 Reach Record
high

3. SEBI Fines a penalty of Rs.1.6 crores on Kotak AMC Chief, Nilesh
Shah, its Trustee company and 6 others for violating regulations in 6
Schemes.
- The fines pertain to 6 of Kotak’s fixed maturity schemes that hold investments in debt securities issued
by Essel Group’s companies- Utility Works Pvt Ltd and Konti Infrapower Pvt Ltd maturing in April &
May 2019.
- Kotak AMC entered into an agreement with promoters of Essel group to extend the maturity of
various Essel group entities to September 2019.
- SEBI found that Kotak AMC failed to disclose its plan to extend the maturity dates of the six schemes
and failed to disclose scheme related information in relation to Essel Group’s adverse financial
position to investors in a timely manner.
- As a result, the 6 schemes were not wound up at the end of their respective maturity dates and
investors in all six schemes were not paid the full amount on maturity based on the NAV of the
respective schemes.
© RightFocus Investments Pvt. Ltd.
SEBI Registered Investment Adviser (INA200006628)

4. SEBI fines PGIM AMC’s CEO, Ajit Menon and 3 fund managers for inter-
scheme transfers (ISTs) during credit crisis.
- The fines pertain to a series of Inter Scheme transfers (315 cases) which took place between August
2018 and February 2019, wherein stressed securities were transferred from open ended schemes to
close ended scheme whilst high quality securities were transferred from close ended schemes to open
ended schemes.
- As per SEBI, the ISTs were done as part of PGIMs strategy to thwart a redemption crisis in its open-
ended schemes having high exposure to illiquid/stressed securities.
- As a result, investors in close ended schemes may potentially bear the losses of these stressed
securities if they continue to be stressed till redemption time of the close-end funds.

5. Nippon India MF Stops inflows in 5 of its International MF Schemes
- A month after the resumption of inflows in international funds, Nippon AMC has suspended lumpsum
subscription, switch ins and fresh registration of SIPs/STP in 5 schemes which invest in international
equities.
- SEBI allowed AMCs the opportunity to invest in international equities to the extent of outflows
(selling/redemptions) that took place from its international stocks since Feb 01, 2022.
- The suspension comes into effect as Nippon depleted its limited headroom to re-invest in international
equities.
- Many fund houses are expected to follow suite as SEBI has not increased the industry limit on
International Equities.
© RightFocus

6. FPI Sales in the first half of 2022 Reach Record High
- A recorded sale of Rs.2.1 lakh crore so far in 2022 by FPIs is the highest ever seen during the 1st half of
any calendar year.
- At a monthly outflow of Rs.45,000 crores is the 2nd highest monthly outflows from FPIs since March
2020 (at Rs. 45,608 crores) with 9 straight months of selling from FPIs which began on Oct 2021.
- Indian Indices fell by 5% in June and by 9% in this year so far.
- At present valuation of Indian equities are high, and experts believe that these valuations in must
become reasonable for foreign investors to consider India more favourably.
© RightFocus

7. Other News
- Hindustan Motors is likely to launch electric 2 wheelers by next year through a joint venture
partnership with a European partner.
- Leasing activity and total absorption of office space in tier 1 cities witnessed an increase of 185%
YOY to 8.5 million square feet. Net absorption in office space is led by Bangalore, followed by
Mumbai and Delhi.
- India vows to provide fuel aid to Sri Lanka, which is currently facing an acute shortage of fuel
supplies.

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