Groww Settles SEBI Violations, Pays Rs 9 Lakh Following Regulatory Review
Groww Asset Management Ltd, formerly known as India bulls Asset Management Company Ltd, along with Groww Trustee Ltd, has reached a settlement with the Securities and Exchange Board of India (SEBI) regarding alleged violations of regulatory norms. This settlement came into effect with payment of Rs 9 lakh by the applicants to SEBI.
The settlement stems from a suo motu application filed by Groww Asset Management and Groww Trustee, wherein they neither admitted nor denied the findings of fact laid out by SEBI. The violations pertained to the period from April 2020 to March 2022, during which certain scheme-related expenses were allegedly not paid from the schemes as required by SEBI circular bearing no. SEBI/HO/IMD/DF2/CIR/P/2018/37 dated October 22, 2018. Instead, these expenses were borne by the AMC which contravened SEBI's stipulation that all such expenses, including distributor commissions, must be exclusively funded through the scheme within regulatory limits.
The SEBI circular bearing no. SEBI/HO/IMD/DF2/CIR/P/2018/37 addresses the norms and obligations concerning scheme-related expenses, including the payment of commissions to distributors. It mandates that all such expenses must be paid exclusively from the scheme's funds within specified regulatory limits.
The transition from India bulls to Groww entities occurred due to the acquisition by Next billion Technology Pvt Ltd in May 2023.
Following the submission of their settlement application, Groww's representatives engaged in discussions with SEBI's internal committee to deliberate on the terms of the settlement.
The order stated:
“On the basis of the facts stated above, in exercise of the powers conferred under Section 15JB read with Section 19 of the Securities and Exchange Board of India Act, 1992 and in terms of Regulation 23 of the Settlement Regulations, it is hereby ordered that any proceedings that may be initiated for the violations as mentioned at paragraph 1 above, are settled in respect of the Applicants.”
With the remittance of Rs 9 lakh confirmed by SEBI, the settlement now protects Groww Asset Management and Groww Trustee from further enforcement actions related to violations. This resolution comes under SEBI's Settlement Proceedings Regulations, 2018, which allow for settlements without an admission of guilt.