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ICICI Venture Funds Management Company and four other entities settled with SEBI a case of alleged violation of norms pertaining to venture capital funds by paying a consolidated amount of over ₹5.2 crore towards settlement charges.
They were also alleged to have violated the Prohibition of Fraudulent and Unfair Trade Practices regulations, Securities and Exchange Board of India (SEBI) said in five separate but similarly-worded orders.
India Advantage Fund III, India Advantage Fund IV, Dynamic India Fund III and Dynamic India Fund IV are the other four entities besides ICICI Venture Funds Management that have settled the case.
In its settlement order, the regulator said the pending adjudication proceedings initiated against the entities through show-cause notices are disposed of.
The allegations
SEBI noted that ICICI Venture was acting as investment manager to India Advantage Fund III and India Advantage Fund IV. In addition, it was also acting as a sponsor to foreign venture capital investors – Dynamic India Fund III and Dynamic India Fund IV.
The allegations against them included factual misrepresentation to investors with regard to registration status, inadequate information and lack of clarity in proposals for extension, liquidity and consent of investors.
Also, it was also alleged that management of the funds was not in accordance with the terms and conditions specified in the private placement memorandum.
ICICI Venture, in a statement, said that under the SEBI’s settlement process, allegations are neither accepted nor rejected by an applicant and the proceedings initiated gets disposed off. This brings the matter to rest.
“Based on allegations by certain individual investors in a family of funds established in 2005-06 and managed or advised by ICICI Venture, the said allegations were contested by the parties and investigated by SEBI.
“Based on the subsequent application for settlement filed by ICICI Venture, SEBI passed various settlement orders against the various entities on November 29 and December 2 with an aggregate settlement amount of ₹5.2 crore for all entities in total,” it added.
However, pending proceedings, the five entities filed settlement applications with the regulator without admitting or denying the guilt.
The settlement terms proposed by them were considered by the regulator’s High Powered Advisory Committee (HPAC). The committee recommended the case for settlement on payment of consolidated settlement amount of ₹5,21,92,635 by them.
The recommendation of HPAC was also accepted by the panel of whole-time members of SEBI.
Accordingly, the five entities paid the consolidated settlement amount, following which the SEBI settled the proposed adjudication proceedings.
SEBI said enforcement actions, including commencing or reopening of the proceedings, could be initiated if any representation made by them is found to be untrue.
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