Amtek Auto crisis: MF panel to decide Sebi action against JPMorgan

Likely to recommend penalty and full refund to investors

The Securities and Exchange Board of India (Sebi) on Tuesday indicated it would take action against JPMorgan Asset Management Company based on the recommendations of the mutual fund advisory committee (MFAC).

Investors in JPMorgan AMC were hurt by exposure to Amtek Auto debentures, on which the automobile components maker had defaulted. The fund house had imposed curbs on redemption in two of its schemes that had exposure to the Amtek Auto paper.

“There are a number of lessons to be learnt from this episode. We will take very important remedial measures very soon,” said UK Sinha, chairman, Sebi, on the sidelines of a corporate governance event organised by the Confederation of Indian Industry.

The MFAC in its recent meeting discussed the JP Morgan episode. The panel was likely to recommend a penalty to be paid by the fund house for its handling of the issue, sources said. The MFAC was also of the view that a full refund should be made to investors, the sources added.

On Monday JPMorgan AMC informed its investors that it had sold the segregated assets. The fund house had sold the Amtek Auto paper to a private equity firm at a 15 per cent loss, sources said.

Sinha on Tuesday also said work was under way to finalise regulations for crowdfunding and to facilitate the sale of mutual fund units on e-commerce platforms. “A Sebi-constituted committee on crowdfunding, headed by Infosys co-founder N R Narayana Murthy, is likely to submit its report in a month,” Sinha said.

Sebi had floated a discussion paper on crowdfunding almost 18 months ago. Sources said Sebi had struggled to lay down the regulations because it was flooded with diverse views.

“The committee is very active and in a month from now we will receive the final report. Then we will come to the area of implementation,” Sinha said.

On the sale of mutual fund units through e-commerce platforms, Sinha said he was meeting the head of the committee, Nandan Nilekani, later on Tuesday and guidelines could be implemented soon. On the startup listing norms, which were finalised in June, Sinha said Sebi had received representations from the industry over taxation hurdles. The market regulator is likely to take them up with the tax department.

SINHASPEAKS

On JPMorgan crisis
Number of lessons to be learnt will take very important remedial measures soon

On sale of mutual fund units via e-commerce platforms
Guidelines expected soon

On crowd funding
In a month from now, Sebi will get final report and then will come to area of implementation

On start-up listing
In receipt of representation about taxation hurdles