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In three separate orders, the regulator slapped a fine of ₹20 lakh each on Nexpact Ltd and AIRD Investment Commercial LLC, while it imposed a penalty of ₹10 lakh on Aviator Global Investment Fund.
The orders came after SEBI had carried out inspections of the custodian, Orbis Financial Corporation, for FY22.
The regulator observed that investments made by Aviator Global Investment Fund, Nexpact Ltd and AIRD Investment Commercial LLC were not in line with the permissible limits (related to residual maturity) for investment in debt securities applicable for FPIs as on March 31, 2022.
Thereafter, SEBI carried out an examination from April 2018 to November 2023 to assess the compliance of the three entities with respect to the provisions of FPI (Foreign Portfolio Investors) rules as well as RBI rules.
According to Reserve Bank of India (RBI) norms, short term investments should not exceed 30% of total investment by an FPI in any category and therefore, were required to be closely monitored and limits adhered to.
In its orders, the markets watchdog said that AIRD Investment Commercial was found to have breached the 30% short-term investment limit across multiple periods. The violations persisted from December 19, 2021 until November 2023.
“The noticee (AIRD Investment Commercial) was holding investments in short term debt securities exceeding the prescribed limit of 30%, for 562 days which is for almost 2 years,” SEBI said.
Similarly, Nexpact Ltd exceeded the short-term investment cap for a continuous period of 586 days, from December 2021 to July 2023. The FPI had admitted that the breach was due to oversight and was immediately rectified.
The regulator, however, held that the violation was repetitive in nature and not adhering to the permissible limit of investment went on for almost two years.
In the case of Aviator Global Investment Fund, SEBI observed that the entity failed to maintain the short-term investments above the prescribed threshold for 373 days between September 2021 and October 2022.
