Markets regulator Securities and Exchange Board of India (SEBI) on Wednesday imposed a penalty of Rs 1.5 crore on Karvy Computershare (currently known as KFin Technologies) for redeeming its units in Taurus Mutual Fund on the basis of privileged information, pertaining to Ballarpur Industries default.
The information was available with Karvy as it was the registrar to issue and share transfer agent or RTA of Taurus Management Company.
By redeeming all units in Taurus Liquid Fund and Taurus Ultra Short Term Bond Fund in February 2017, Karvy Computershare made unlawful gain of about Rs 1.2 crore, SEBI said in an order.
Karvy Computershare misused its privileged position as RTA (Registrar to Issue and Share Transfer Agent) of Taurus Asset Management Company.
In a statement, KFin Technologies said the company will examine the order of SEBI and decide the further course of action.
It further said the order pertains to a matter of 2017 and related to Karvy Computershare Private Limited (KCPL) when it was part of the erstwhile promoter group and management.
KFin Technologies is the successor entity where KCPL got merged in 2018. The present promoter of KFin Technologies is General Atlantic, the company added.
In its 56-page prder, SEBI said, “the actions of the noticee in putting in its redemption application for all units on the day of default by BILT (Ballarpur Industries) on commercial paper repayments were carried out based on privileged information garnered in its capacity as RTA, information which was not yet available to other investors.”
“The redemption of all units by the noticee clearly caused it to make gains at the cost of other investors who could only redeem units at the post-default NAV (net asset value),” it added.
The noticee refers to Karvy Computershare.
The dealing in units of Taurus Mutual Fund by the RTA clearly helped it avoid losses and which induced other investors to suffer losses larger than they would have had the noticee redeemed units at post-default values, SEBI noted.