Mumbai: ICICI Prudential Mutual Fund on Thursday settled a case of violation of mutual fund rules with the Securities and Exchange Board of India (Sebi). The case pertains to a large investment made by ICICI Prudential Mutual Fund in the flop initial public offering (IPO) of affiliate ICICI Securities Ltd. ICICI Securities had to cut its initial public offering (IPO) size to 3,520 crore from the original target of 4,017 crore because of poor investor interest. Of this, a large chunk was bought by ICICI Mutual Fund.

Following the large investment, Sebi launched a probe to ascertain if the fund house is in violation of the model code of conduct prescribed in Sebi mutual fund norms.

The fund house settled the offence for 89.96 lakh and the managing director and chief executive officer of the fund house settled the offence for 6.8 lakh.

In July, the market regulator had also directed the fund house to return 240 crore at 15% interest to the investors of the scheme which had invested in the initial public offering.

Sebi had found that the actions of the fund house, its chief executive officer and the respective fund managers were not in the interest of unit holders.

ICICI was also in violation of mutual fund rules related to the code of conduct and due diligence in revising its bids and putting in more money to help save the ICICI Securities IPO on the last day, after which Sebi appointed an adjudicating officer for penalties and directions.

ICICI Prudential Mutual Fund under five of its schemes—ICICI Prudential Balanced Advantage Fund, ICICI Prudential Balanced Fund, ICICI Prudential Banking and Financial Services Fund, ICICI Prudential Focused Bluechip Equity Fund and ICICI Prudential Value Fund Series 19—applied for and was allotted 123.08 lakh shares at a price of 520 apiece, totalling 640 crore in the qualified institutional buyer category. 400 crore was applied on the first day of bidding and 240 crore was applied on the last day.

Meanwhile, the market regulator is yet to conclude its probe against Chanda Kochhar, former managing director and chief executive officer of ICICI Bank, and the bank on charges of disclosure violations and alleged impropriety in granting loans to the Videocon group.

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