Sebi probes JPMorgan's risk assessment system

Market regulator investigates fund house for possible lapses in stress management systems

Market regulator Securities and Exchange Board of India (Sebi) has started a probe into JPMorgan Asset Management Company, a source says.

The regulator sought risk-assessment reports from the fund house.

The fund house faces an uphill task to restore investors' faith, because two of its schemes had an exposure of Rs 200 crore (or seven per cent of their total assets) to Amtek Auto's debt as on July 31. Amtek Auto defaulted on its debt in September.

An e-mail to the fund house went unanswered.

The regulator orders fund houses to assess risk in liquid schemes, on a monthly basis.

If a risk shows up, the fund house must tell trustees and take action, a source said

"Each fund house must have rules, to deal with the situation," said the source.



In September, Delhi-based automobile component maker Amtek Auto defaulted on a payment to JPMorgan's schemes. The fund house had to cap redemptions.

Recently, JPMorgan transferred the assets exposed to Amtek debt to separate units.

During the quarter ended September, the fund house's assets fell by Rs 2,200 crore, or 15 per cent, to Rs 12,455 crore, from Rs 14,683 crore at the end of the previous quarter.

The regulator has asked fund houses to do homework before investing.
THE AMTEK AUTO CRISIS IN SLOW MOTION

Aug 7: CARE suspends rating of Amtek Auto
Aug 28: JPMorgan puts redemption cap on its 2 Amtek-hit schemes
Sep 7: CRISIL downgrades JMT Auto, another Amtek group company
Sep 18: Standard & Poor's withdraws ratings of Amtek Global Technologies
Sep 22: Amtek Auto defaults on its debt
Sep 28: JPMorgan lifts redemption cap on its 2 Amtek-Auto-hit scheme