The Securities and Exchange Board of India (SEBI) has imposed a total penalty of ₹29 lakh on six entities, including India Asset Growth Fund (IAGF), its manager Essel Finance Advisors and Managers (EFAM), and trustee Vistra ITCL (India), for multiple breaches of Alternative Investment Fund (AIF) regulations.
According to a 39-page order issued on Friday, SEBI levied fines of ₹11 lakh on IAGF, ₹10 lakh jointly on Arpan Sarkar and Jaykishan Kikani, ₹6 lakh on Vistra ITCL (India), and ₹2 lakh jointly on EFAM and its CEO Vishnu Prakash Rathore.
The penalties follow an inspection of IAGF’s operations during April 2021 to March 2022, during which SEBI found serious lapses in regulatory compliance.
Key violations included the failure to disclose disciplinary actions and litigation history related to the fund’s sponsor, manager, trustee, and key personnel in the placement memorandum (PPM), as required under AIF norms. Although a revised PPM with the required disclosures was later submitted as part of a change in control application, it was neither approved by SEBI nor shared with investors—violating disclosure requirements under the AIF code of conduct.
SEBI also noted that IAGF used asset-based valuations rather than valuations of held securities, delayed its registration with the Financial Intelligence Unit (FIU-IND), failed to disclose the investor charter and distribution waterfall, and was late by 10 days in submitting its PPM audit report.
Further, the fund took over 30 days to respond to an investor complaint, exceeding the regulatory deadline. While the fund completed its winding-up process and distributed proceeds to all investors by January 2024, SEBI considered the regulatory breaches to be significant.
The regulator stated that these violations had the potential to mislead investors and hinder effective oversight of AIFs. It held EFAM, as the fund manager, responsible for the lapses, and confirmed that its key personnel—Rathore, Sarkar, and Kikani—had failed to comply with the AIF code of conduct. Consequently, the charges against them were upheld.
