Indian funds, portfolio managers under US regulatory scanner

US regulator

Many Indian funds and portfolio managers from India are believed to have come under scanner in the US for serving clients there without the required regulatory approvals for such activities.

These entities also include those soliciting investments from institutional and individual investors in the US, including Non-resident Indians (NRIs), in funds and portfolio products involving arts, real estate, commodity and various other non-equity assets, sources said.

Last week itself, the US market regulator SEC charged four Indian brokerages -- Ambit Capital, Edelweiss, JM Financial and Motilal Oswal -- for providing unauthorised broking services to the American clients.

While the Securities and Exchange Commission (SEC) agreed to settle the charges against these brokerages after a payment of more than USD 1.8 million (about Rs 10 crore) by them, the US market regulator might take stricter action against other entities from India being probed by it, sources said.

In the case of these brokerages, the quantum of business provided by them to their US clients was not big and they also readily agreed to take corrective steps after being contacted by the SEC regarding their possible violations.

The SEC is also probing the role of some other Indian brokerage firms for potential violation of similar nature.

However, in the case of the portfolio managers and funds, the violations are said to be of much bigger in nature, a senior official said.

The US regulator has also contacted financial regulatory authorities in India with regard to its probe into Indian entities, while notices have also been served to some of the companies suspected to be serving the US clients without proper authorisation in the country, the official added. However, he declined to name the entities, saying it

might come in way of the probe and could also affect their business interests in case they are not found to be guilty.

... contd.

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