SEBI has imposed a penalty of ₹10 lakh on Shubro Sankha Das Sarma, Head of Operations at Bank of India Investment Managers (previously BOI AXA Investment Managers) for redeeming his entire investment in credit risk fund after being privy to unpublished information.
SEBI had conducted thematic inspection of BOI AXA Mutual Fund for August 1, 2018, to February 28, 2019, to verify the books of accounts with respect to Inter Scheme Transfer and valuation of downgraded debt securities. On finding certain lapses, SEBI initiated Adjudication Proceedings against Bank of India Investment Managers, Rajesh Chawathe, Sandeep Dasgupta, Jayati Dasgupta, Anurupa Dasgupta, Alok Singh and Shubro Sankha Das Sarma. Last December, the fund house and five others except for Sarma settled the case by paying ₹3.92 crore.
Sarma had invested ₹19 lakh in credit risk fund between 2015 and 2017. He redeemed ₹20.88 lakh in phases after the fund started making provisioning for default on debt investment by three companies.
SEBI, in its order, said being a member of the valuation committee, Sarma was in possession of material unpublished information regarding valuation of defaulted securities, and withdrew his entire holdings in credit risk fund. Redeeming investment while being in possession of unpublished information is an ‘unfair trade practice’.
The ill-gotten gains of Sarma were about ₹46,226. However, the gain was made prior to the full provisioning of the defaulted securities, it said. Considering all the facts and circumstances of the case, SEBI has imposed a penalty of ₹10 lakh on Sarma.