Sebi imposes fine of Rs 36 lakh on PGIM Asset Management and its CEO

Capital markets regulator Sebi has imposed a penalty totalling Rs 36 lakh on five entities — including PGIM Asset Management Company and its chief executive officer Ajit Menon — for flouting mutual funds norms while executing Inter-Scheme Transfers (ISTs). 

Apart from these, the regulator has penalised Kumaresh Ramakrishnan, Puneet Pal and Rakesh Suri. They were the fund managers at the time of the violation of the rule. In its order, Sebi noted that five entities did not adhere to the provisions of the mutual fund regulations while executing ISTs between open and close-ended schemes of PGIM MF. 

While executing ISTs, certain low-quality securities were transferred from close-ended schemes to open-ended schemes.The swap was done to thwart or arrest the potential redemption pressure. Deadline for new pledging system extended to September 1.

The market watchdog also extended the deadline for the introduction of Demat Debit and Pledging Instruction (DDPI) system to September 1. The earlier deadline for implementation was July 1. However, depository firms tasked with readying the backend for the new system asked the regulator for an extension as the “changes to the systems are still under process”.

The new DDPI system is designed to prevent misuse of client securities by brokers.