SEBI dismisses L&T Investment Management case without penalty

Capital market regulator SEBI has not levied any penalty and disposed off the case against L&T Investment Management for not maintaining proper records on investment decisions.

The inspection report submitted to SEBI alleged that the AMC maintains the data, facts and opinion leading to decision in case of first-time investment. But no detailed reasons containing data, facts and opinion leading to select a particular security for sale are recorded by the fund manager in subsequent purchase and sale.

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It was observed by the auditor that AMC uses only standard phrases such as “investment purchase “switching to better opportunities”, “booking profits”.

Maintaining records

The AMCs need to maintain records in support of each investment decision which will indicate the data, facts and opinion leading to that decision.

After considering the AMC’s response, SEBI found that it was not properly recording investment decisions as per norms.

However, SEBI in its order observed that there are no timelines given in the MF Regulations or Circular prescribing timelines for updating research reports.

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L&T Investment Management has also claimed that there was active monitoring of stocks of the investee companies.

Thus the allegation of lack of due diligence by not updating the research report does not stand established, said SEBI.

Accordingly, the adjudication proceedings initiated against L&T Investment Management stand disposed off without any penalty, said SEBI.