Essel-linked FMP case: Kotak AMC gets partial relief

Securities Appellate Tribunal grants partial relief to Kotak Mahindra Asset Management Company in the Securities and Exchange Board of India case over Essel-linked FMP investments

The Securities Appellate Tribunal (SAT) has granted partial relief to Kotak Mahindra Asset Management Company in a case related to certain fixed maturity plans (FMPs) that had exposure to Essel Group entities. The tribunal set aside the Securities and Exchange Board of India’s (Sebi’s) direction to disgorge management fees but upheld penalties imposed by the market regulator. 

The case stems from investments made by six FMP schemes of Kotak Mutual Fund in zero-coupon non-convertible debentures issued by Essel Group entities. 

A spokesperson for Kotak Mahindra AMC said the company respects the due process of law and will review the detailed judgment once available. The tribunal has granted eight weeks’ time to pursue further legal remedies, which the company will evaluate. 

 

Kotak AMC also said the order has no impact on existing schemes or unit holders, adding that its commitment to compliance, investor interests, and governance standards remains unchanged. 

Sebi, in an order passed in August 2021, had directed Kotak AMC to refund a portion of the investment management and advisory fees collected from investors in the six schemes, along with interest. The regulator had also imposed penalties on Kotak Mahindra Trustee Company and several officials.  Disclosure: Entities controlled by the Kotak family have a significant shareholding in Business Standard Ltd.