Market regulator Securities and Exchange Board of India (Sebi) has barred fund manager Brick Eagle LLP for a period of one year after finding it guilty of compliance violations, as per an order uploaded on the regulator’s website.
It has also taken action against Catalyst Trustee, on whom it imposed a one-year ban on the grounds that it overlooked compliance violations by the fund manager. The ban is only applicable to trustee services provided to funds by Catalyst and not to its mainstay debenture trustee business.
Brick Eagle LLP, promoted by former Standard Chartered executive Rajesh Krishnan, had announced a ₹500 crore affordable housing fund in 2017 to fund housing projects priced under ₹10 lakh a unit, for which the government was providing subsidies.
The fund’s initial investors included Axis Bank, Bennett Property Holdings Company (BPHCL), Pulkit Benefit Trust, Ridaan and Ruhaan Buildwell and Brick Eagle itself. Sebi said some of the investors had complained to it about lapses by the fund manager.
In an order delivered by its whole time member Ashwani Bhatia, Sebi said that it found Brick Eagle had not made the necessary contributions to the fund as was mandatory for a fund sponsor nor had it achieved targets of closing the fund as was laid out in a private placement memorandum to the investors.
In its defense, Brick Eagle claimed it was unable to raise the funds as the market conditions were not conducive due to the crisis triggered by the collapse of IL&FS and DHFL. Catalyst Trustee said the company originally appointed as trustee of the Brick Eagle fund was Milestone Trustee and not itself. It said it had acquired Milestone later. It pleaded innocence on grounds that its experience in acting as a trustee for funds was limited. Catalyst is expected to appeal the regulators decision.
Brick Eagle affordable housing fund is in the process of being wound down.
