Principal Mutual Fund units settle proceedings with Sebi, pay Rs 78 lakh

Principal Mutual Fund units today settled with Sebi the proceedings related to alleged violation of norms pertaining to total expense ratio (TER) on a payment of nearly Rs 78 lakh towards settlement charges.

TER is a percentage of a scheme's corpus that a mutual fund house charges towards expenses including administrative and management.

The Securities and Exchange Board of India (Sebi) had initiated adjudication proceedings against Principal Mutual Fund, Principal Trustee Company and Principal PNB Asset Management Company for alleged violation of Mutual Fund Regulations pertaining to TER and breach of maximum permissible TER limits.

The three units had allegedly miscalculated the total expense ratio in the books of accounts, resulting in breach of maximum permissible TER.

While the adjudication proceedings were in progress, the Principal Mutual Fund, Principal Trustee Company and Principal PNB Asset Management Company had submitted an application for their settlement, Sebi said in an order.

The settlement terms proposed by them were placed before Sebi's High Powered Advisory Committee, which recommended the case for settlement on payment of Rs 25.90 each by the three units. The recommendation of the committee was also approved by a panel of the Whole Time Members of the regulator.

On March 23, Principal Mutual Fund, Principal Trustee Company and Principal PNB Asset Management Company paid the settlement amounts, following which Sebi disposed of the adjudication proceedings initiated against them.

However, Sebi said if any representation made by the three units in the settlement proceedings is subsequently found to be untrue, the regulator would take enforcement actions against them.