NEW DELHI: Two Edelweiss entities have settled a case with market regulator Sebi over alleged violations of alternative investment fund (AIF) rules by collectively paying Rs 61.4 lakh as settlement charges.
Apart from the settlement amount, Sebi directed that officers-in-default of Edelweiss Stressed and Troubled Assets Revival Fund Trust and Edelweiss Alternative Asset Advisors Ltd will not engage with the company for 12 months.
“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 followed two settlement applications filed by the entities, proposing to resolve the proceedings without admission or denial of the findings of fact and conclusions of law.
The case arose from complaints lodged on SCORES, Sebi’s online grievance platform, alleging lapses in governance and conflict management against the Edelweiss-managed AIF. Sebi noted that Edelweiss Stressed and Troubled Assets Revival Fund Trust failed to act in the interest of investors and did not exercise independent professional judgment, violating Sebi norms.
Edelweiss Alternative Asset Advisors was found to have conducted AIF activities not in accordance with the PPM and submitted inaccurate information to the trustee in the FY 2016-17 compliance test report, also breaching AIF regulations.
Following the SCN issued on July 12, 2024, the entities filed revised settlement terms, which were approved by Sebi’s high-powered advisory committee. The settlement amount was subsequently paid and confirmed by the regulator.
Edelweiss has informed Sebi that corrective measures have been taken, 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 noted that the settlement would be without prejudice to its right to reopen the matter if disclosures are found to be false or incomplete.