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SEBI Finds Invesco Breached The Rules By Transferring Debt To An Offshore Fund

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The marketplaces regulator, SEBI has discovered sufficient proof that Invesco Asset Management India Pvt. Ltd has implemented trading activities on representative offshore funds, in violation of Indian mutual fund regulations.

SEBI’s Expert Advice

Other than delivering expert advice, the Securities and Exchange Board of India (Sebi) prohibits mutual funds from just doing business with foreign funds. The guidelines also say that local and offshore enterprises must keep separate finances, people, and activities.

“The domestic fund manager staff at Invesco made trades in favour of offshore accounts” (focusing on Indian debt). This is against Sebi fund manager regulation 24 (B),” one of its two people described above, who asked to remain anonymous, claimed.

“In terms of business execution, that’s where the Chinese border was breached.” The activities of an investment management company (PMS) and a national mutual fund must remain distinct at all times. “An independent inquiry conducted by the financial institution also confirmed the infringement,” added the second person, who also requested anonymity.

On Monday, an email was sent to an Invesco spokeswoman in India, but no answer was received, despite repeated warnings on Tuesday. Emails submitted to a Sebi spokeswoman were unanswered as well.

Investment firms use the PMS to administer their offshore funds.

Invesco Asset Management

The flaws originally arose when a tipster accused Invesco Asset Management India of mismanaging fixed income programmes between 2018 and 2019. The claimant claimed that Invesco MF’s fixed-income securities team recognised certain debt documents, such as Dewan Housing Finance Ltd, which was about to become stressed as a result of IL&FS’ default. After that, the team transferred the risk to their offshore money.

The first person stated, “The overall amount of such trades is over 200 crores.”

Inter-scheme transference refers to the transfer of assets from one plan to another, which is a very common procedure till 2020. However, beginning in January 2021, the regulator would prohibit such transfers because they just move risk through one fund to the next without the awareness of shareholders.

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