SC upholds SEBI action against Kotak AMC in mutual fund regulations case

The Supreme Court has upheld the Securities and Exchange Board of India’s (SEBI) findings and penalties against Kotak Asset Management Company (AMC), its Managing Director Nilesh Shah and five other senior officials in a case relating to alleged violations of mutual fund regulations.

SEBI had held that Kotak AMC and the officials violated mutual fund regulations by not taking investment decisions solely in the interest of unit holders.

In its ruling, the Supreme Court said it had a warning message for the asset management industry: “Mandate first, gains later; SEBI compliance should never falter.”
The court stressed the importance of adhering to the regulatory framework governing mutual funds.

The apex court also imposed litigation costs of ₹30 lakh on Kotak AMC and ₹20 lakh on Kotak Trustee.

Earlier, SEBI had levied a total penalty of ₹1.6 crore on Kotak AMC, Nilesh Shah and five other senior officials for the regulatory violations.

The Supreme Court’s judgment upholds SEBI’s findings as well as the penalties imposed in the matter.

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