Six entities pay ₹4.14 crore to settle FPI rule violation case with Sebi

New Delhi, Mar 21 (PTI) Six entities, including US-based investment firm Acacia Partners and its affiliates, have settled a case pertaining to alleged FPI rules violation, after paying ₹4.14 crore towards the settlement amount.

Acacia Partners, its affiliates and Conifer Management LLC had filed suo-motu settlement applications in terms settlement proceedings norms proposing to settle by neither “admitting nor denying the findings of fact and conclusions of law”, according to a Sebi order.

The settlement resolves the case, and no further action will be taken against the applicants unless they breach the terms of the settlement, the order said.

“…in terms of the settlement regulations, it is hereby ordered that any proceedings that may be initiated for the violations are settled,” Sebi’s wholetime member Kamlesh C Varshney said in the order dated March 20.

These entities had allegedly breached various provisions of the Sebi’s FPI (Foreign Portfolio Investors) rules and the Prevention of Money Laundering (Maintenance of Records) norms, 2005.

The violations primarily pertained to incorrect disclosures of beneficial ownership, delays in reporting material information, and breaches of investment limits in a listed Indian company.

The FPIs failed to disclose that Conifer Capital Management LLC and its key individual, Gregory Alexander, exercised 100 per cent control over their operations, the order said.

This misrepresentation persisted from October 2014 to August 2023, during which time the investment limits of the FPIs were not clubbed as required under norms, it added.

Following the disclosure, the markets watchdog found that the combined holding of the FPIs in McDowell Holdings Ltd had breached the 10 per cent cap applicable to a single foreign investor group.

As per Sebi’s FPI rules, the purchase of equity shares of each company by a single foreign portfolio investor including its investor group shall be below ten per cent of the total paid-up equity capital on a fully diluted basis of the company.

The regulator initiated its probe after receiving an alert from NSDL in September 2023, which flagged that aggregate holding of FPIs under Acacia Institutional Partners had exceeded the 10 per cent investment limit in McDowell Holdings based on their demat holdings as of September 28, 2023.

Individually, Acacia Partners LP, Acacia Institutional Partners LP, Acacia II Partners LP, Acacia Conservation fund LP and Acacia Banyan Partners paid ₹78 lakh each and ₹24.37 lakh was paid by Conifer Management LLC.