Bank of India Mutual Funds (MF) has settled an investigation initiated by the Securities and Exchange Board of India (Sebi).

Sebi, in November 2022, accused India’s 30th-largest fund house, which has assets of about Rs 3,369.95 crore, of violating norms on the valuation of debt securities, saying it had unfairly transferred distressed securities, which were also classified as high-risk. Plans are divided into low-risk and medium-risk procedures.

The market watchdog also observed that Sandeep Dasgupta, the former chief executive officer (CEO) of Bank of India MF, had withdrawn significant investment from the fund house.

In its settlement order issued on December 28, Sebi said that it observed that Dasgupta had all unpublished material information regarding the valuation of defaulted securities. With the displayed information, he withdrew almost his entire investment from the fund for his benefit.

Sebi said not only Dasgupta but his wife and daughter also redeemed their investments after allegedly knowing of the fund company’s plight. In the settlement order, Sebi said it appeared Dasgupta would pass on the information to his wife and daughter, who also decided to withdraw the investment.

The regulator has imposed a fine of Rs 93.60 lakh on Dasgupta and Rs 39 lakh each on Dasgupta’s wife and daughter. In addition, Sebi also imposed a penalty of Rs 1.36 crore on the fund house, Rs 39 lakh on its compliance officer (at that time) Rajesh Chavathe and Rs 45.50 lakh on the fund house’s chief investment officer Alok Singh, who heads the fund management team.

Sebi conducted inspections on the Bank of India mutual fund (BOI AXA MF) between August 2018 and February 2019. It found fund companies valued debt securities, moved securities between schemes, and CEOs and their families unfairly redeemed their shares.

Most of 2020 were spent by Sebi seeking clarifications from the fund houses. Convinced that a detailed investigation was needed, Sebi initiated adjudication proceedings against the fund house. In May 2022, Sebi issued a circular explaining the reasons for funding houses.

After exactly two months, in July 2022, BOI MF settled the matter with Sebi by paying a fine. To be sure, the settlement is neither an admission nor a denial of the allegations.

Dasgupta resigned from the fund house in March 2021. Anthony Heradia took over as chief executive of the fund house in August 2021 but stepped down in February 2022. In October 2022, Mohit Bhatia joined the fund house as Chief Executive Officer. From 2013 until September 2022, Bhatia was employed by Canara Robeco MF.