Overview
- The Supreme Court affirmed SEBI’s findings and penalties on Kotak Mahindra Asset Management Company, its trustee and six senior executives for mishandling six Fixed Maturity Plans.
- The case concerns about Rs.266 crore invested in debt of two Essel Group firms that were backed by pledged Zee Entertainment shares which lost value in early 2019 and led Kotak to extend debenture maturities instead of invoking the pledge.
- The court rejected Kotak’s defence that investors ultimately profited, saying investor gains cannot excuse breaches and that market integrity must guide enforcement.
- SEBI’s sanctions that remain in force include monetary fines on the AMC and trustee and individual penalties for six executives, plus directions to refund portions of fees with interest and a temporary ban on launching new FMPs.
- The court ordered Kotak AMC and the trustee to deposit litigation costs with the Supreme Court Registry for distribution to charities, a decision that industry watchers say will reinforce stricter governance and senior-executive accountability going forward.