6 September 2026
SEBI settles a pro-rata continuing-interest case against Modulus Alternatives Investment Managers, order dated 30 July 2026
What was the SEBI settlement in the Modulus Alternatives continuing-interest matter?
SEBI examined the quarterly activity reports of India Credit Opportunities Fund II and found that its investment manager, Modulus Alternatives Investment Managers Limited, had drawn down a smaller proportion of its own commitment than other investors had drawn of theirs, between August 2023 and March 2025. The manager applied to settle without admitting or denying the findings, and paid ₹10,87,500.
What happened
SEBI passed a settlement order dated 30 July 2026, reference SO/PSD/2026-27/8664, signed by whole time members Kamlesh Chandra Varshney and Amarjeet Singh. It was published on SEBI's site on 3 August 2026.
The applicant is Modulus Alternatives Investment Managers Limited, the investment manager of India Credit Opportunities Fund II, which the order describes as registered with SEBI as a Category II Alternative Investment Fund.
The alleged violation
SEBI examined the fund's Quarterly Activity Reports. Alerts on the report for June 2024 showed that the manager's drawdowns were not pro-rata to the drawdowns made from other investors in the fund.
The order sets out the drawdown schedule. Amounts are in ₹ crore, and the percentages are of each side's own commitment:
| Call due date | Manager commitment | Manager drawn | Manager % | Other-investor commitment | Drawn by other investors | Other investors % |
|---|---|---|---|---|---|---|
| 24 August 2023 | 5 | 0.5 | 10 | 146.20 | 32.95 | 22.54 |
| 28 November 2023 | 5 | 0.5 | 20 | 260.00 | 68.09 | 26.19 |
| 5 April 2024 | 5 | 1 | 40 | 305.05 | 135.61 | 44.46 |
| 27 August 2024 | 5 | — | 40 | 387.75 | 247.71 | 63.88 |
| 9 October 2024 | 5 | — | 40 | 415.15 | 334.97 | 80.69 |
| 24 February 2025 | 5 | 3 | 100 | 479.05 | 440.23 | 91.90 |
The order notes that the final ₹3 crore drawdown was made on 27 March 2025, and that the manager's percentage ran below the other investors' from 24 August 2023 until that date. It attributes a violation of regulation 10(d) of the AIF Regulations read with clause 11.1.2 of the Master Circular for Alternative Investment Funds dated 7 May 2024, and records that the non-compliance was rectified in the quarter ending March 2025.
How it was settled
The applicant filed a suo-motu settlement application, number 8664/2025, neither admitting nor denying the findings. SEBI's Internal Committee met the applicant's representatives on 11 March 2026 and recommended a settlement amount of ₹10,87,500, computed under Schedule II read with regulation 10 of the Settlement Regulations. The applicant proposed the same amount the same day. The High Powered Advisory Committee agreed on 25 March 2026, the Panel of Whole Time Members approved on 11 May 2026, a notice of demand issued on 20 May 2026, and the applicant confirmed remittance on 25 May 2026.
Under section 15JB of the SEBI Act, 1992 read with regulation 23 of the Settlement Regulations, proceedings that may have been initiated are settled. SEBI will not bring enforcement action for those violations.
Why it matters beyond this fund
Continuing interest is one of the few structural protections the AIF regime gives an investor, and this is the second such case the site has recorded in three months, after a Nippon India scheme settled a comparable matter on 15 July 2026. Both began the same way: an alert on a routine quarterly activity report, not a complaint.
Note what the register does and does not carry. SEBI registers the fund, not the scheme and not the manager, so neither Modulus Alternatives Investment Managers Limited nor India Credit Opportunities Fund II appears as its own entry in the public register of Alternative Investment Funds. A manager's compliance history is reconstructible only from enforcement orders like this one.
What is not settled
Nothing in the order determines that the violation occurred. A settlement under the Settlement Proceedings Regulations disposes of proceedings without adjudicating them, and the order says so on its face.
Sources
- Settlement Order in the matter of violation of Pro-rata continuing interest by Modulus Alternatives Investment Managers Limited — SO/PSD/2026-27/8664 — SEBI, 30 July 2026 · primary
- Settlement Order, full text, 4 pages — SEBI, 30 July 2026 · primary
Dated 6 September 2026. The dateline is the date of the instrument this item reports, not the date the page was written. This page reports what a document says. It is information, not legal, tax or investment advice, and it is not a recommendation about any fund.