Authority: Securities and Exchange Board of India (Whole Time Members Kamlesh Chandra Varshney and Amarjeet Singh)

Order Date: July 30, 2026

Case Overview

The settlement order concerns Modulus Alternatives Investment Managers Limited (PAN: AAHCC9755G), which filed a suo-motu settlement application (No. 8664/2025) under SEBI (Settlement Proceedings) Regulations, 2018. The case involves alleged violation of Regulation 10(d) of SEBI (Alternative Investment Funds) Regulations, 2012, read with clause 11.1.2 of the Master Circular for Alternative Investment Funds dated May 07, 2024.

SEBI examined Quarterly Activity Reports of India Credit Opportunities Fund II, a Category II Alternative Investment Fund managed by the applicant. Alerts generated in June 2024 revealed that drawdowns made by the Investment Manager were not pro-rata to drawdowns from other investors, breaching the continuing interest criteria requirement.

The specific violation occurred between August 24, 2023 and March 27, 2025, where the Investment Manager's drawdown percentage to its commitment was consistently lower than that of other investors:

  • On 24/08/2023: Investment Manager drew 10% (₹0.5 cr of ₹5 cr commitment) vs other investors' 22.54% (₹32.95 cr of ₹146.20 cr)
  • On 28/11/2023: Investment Manager drew 20% (₹0.5 cr) vs other investors' 26.19% (₹68.09 cr of ₹260.00 cr)
  • On 05/04/2024: Investment Manager drew 40% (₹1 cr) vs other investors' 44.46% (₹135.61 cr of ₹305.05 cr)
  • On 27/08/2024: Investment Manager drew 40% (no additional amount) vs other investors' 63.88% (₹247.71 cr of ₹387.75 cr)
  • On 09/10/2024: Investment Manager drew 40% (no additional amount) vs other investors' 80.69% (₹334.97 cr of ₹415.15 cr)

The Investment Manager rectified this non-compliance in the quarter ending March 2025 by making an additional drawdown of ₹3 crores on March 27, 2025.

The settlement process involved meetings with SEBI's Internal Committee on March 11, 2026, where settlement terms were deliberated. The IC recommended a settlement amount of ₹10,87,500 (Rupees Ten Lakhs Eighty-Seven Thousand Five Hundred) computed under Schedule II read with Regulation 10 of Settlement Regulations. The High Powered Advisory Committee recommended settlement on these terms in its meeting on March 25, 2026, which was approved by the Panel of Whole Time Members on May 11, 2026.

Final Outcome

SEBI ordered settlement of potential enforcement proceedings against Modulus Alternatives Investment Managers Limited upon payment of ₹10,87,500, which was remitted on May 25, 2026. The order prohibits SEBI from initiating enforcement action for the specified violations, without admission of guilt by the applicant. The settlement is subject to SEBI's right to take appropriate action if any representations are found untrue, if the applicant breaches any undertakings/waivers, or if discrepancies are found in settlement terms.

Topics: SEBI Settlement, AIF Compliance, Pro-Rata Violation