**Settlement of FPI Rule Violation Case Involving Acacia Partners**
Six entities, including the US-based investment firm Acacia Partners and its affiliates, have settled a case regarding alleged violations of Foreign Portfolio Investor (FPI) rules by paying ₹4.14 crore. The settlement was finalized on March 20, 2023, following the submission of suo-motu settlement applications by Acacia Partners, its affiliates, and Conifer Management LLC. The parties involved neither admitted nor denied the findings of fact and conclusions of law as per the Securities and Exchange Board of India (Sebi) order.
### Background of the Case
– **Who:** Acacia Partners, its affiliates, and Conifer Management LLC.
– **What:** Settlement of a case related to FPI rules violations.
– **When:** Settlement finalized on March 20, 2023.
– **Where:** New Delhi, India.
– **Why:** Allegations of incorrect disclosures and breaches of investment limits.
### Allegations and Violations
The entities were accused of violating several provisions of Sebi’s FPI rules and the Prevention of Money Laundering (Maintenance of Records) norms, 2005. Key violations included:
– Incorrect disclosures of beneficial ownership.
– Delays in reporting material information.
– Breaches of investment limits in McDowell Holdings Ltd.
The order revealed that Conifer Capital Management LLC and its key individual, Gregory Alexander, exercised full control over operations, a misrepresentation that lasted from October 2014 to August 2023. This led to the combined holding of the FPIs exceeding the 10% cap applicable to a single foreign investor group.
### Regulatory Action
Sebi initiated its investigation after receiving an alert from NSDL in September 2023, which indicated that the aggregate holding of FPIs under Acacia Institutional Partners had surpassed the 10% investment limit in McDowell Holdings based on their demat holdings as of September 28, 2023.
### Settlement Details
– Acacia Partners LP, Acacia Institutional Partners LP, Acacia II Partners LP, Acacia Conservation Fund LP, and Acacia Banyan Partners each paid ₹78 lakh.
– Conifer Management LLC paid ₹24.37 lakh.
Sebi’s order confirmed that no further action would be taken against the applicants unless they breach the terms of the settlement.
### Conclusion
This settlement highlights the importance of compliance with FPI regulations. How can investors ensure they adhere to these rules to avoid similar violations?
**FAQ: What are the consequences of violating FPI rules?**
Violating FPI rules can lead to significant penalties, including financial settlements, restrictions on future investments, and potential legal action from regulatory bodies like Sebi.
