SEBI to act tough on Mutual Fund houses that do not comply with set norms

Mumbai: The Securities and Exchange Board of India (Sebi) on Thursday said that the regulator would take tough actions against fund houses, which do not comply with the requirement of minimum number of investors in a mutual fund scheme.

According to Sebi’s ‘20:25’ norms, a mutual fund scheme should have a minimum of 20 investors and a single investor should not hold more than 25 per cent of the scheme’s asset under management (AuM). While addressing the CII MF summit, U.K.Sinha, chairman, Sebi said that a few fund houses were violating this particular provision and the regulator had already issued advisories to them.

“In a particular incident, just before the end of the quarter, an investor brought down his holding to comply with the minimum 25 per cent norms. But soon after the beginning of the next quarter, the investor is again seen crossing that limit. We have started our own inspection. We have issued directives to fund houses to comply with the norms. If it doesn’t work, we will take tough action against them,” Mr Sinha said.

The Sebi chairman also brought forward the issue of misutilisation of investor awareness funds by the fund houses. The regulator directed all the chief executive officers of mutual funds to ensure that investor awareness funds are utilised for the intended purpose.

“Look at the quality of investor awareness programme and the way they are conducted. In an investor awareness programme conducted by a fund house, there were just 4-8 participants. In another instance, a meeting of distributors was projected as investor awareness programme. So I request all the chief exexcutive officers and the trustees to look at the quality of these programmes and the manner in which they are conducted,” said Mr Sinha.