MUMBAI, February 7: The Securities and Exchange Board of India (SEBI) has further finetuned the advertisement code for mutual funds by increasing the scope for publication of risk factors.In the recently notified amendments to the mutual fund regulations, SEBI has ruled that all advertisements announcing the launch of a scheme and those which solicit subscription to the scheme shall disclose all the risk factors as required by the advertisement code.
It has also said that all advertisements containing performance information, advertising yield/return and the like, should disclose all the risk factors. However, any advertisement which discloses only the latest net asset value (NAV), sale and repurchase price without any reference to the corresponding past figures may not disclose the risk factors, the amendment said. However, the advertisement should include a statement that "investors are advised to read the offer document before investing in the scheme."
At present, advertisements by mutual funds arerequired to make a clear statement to the effect that all mutual funds and securities investments are subject to market risks and there can be no assurance that the fund's objectives will be reached. The warning statement ".... is only the name of the scheme and does not in any manner indicate either the quality of the scheme, its future prospects of returns etc," is also required to be given in the advertisement.
However, SEBI has said that while all advertisements should indicate the names of the settlor, trustee, manger and financial advisor, bringing out clearly the legal status and liability, there is no need to bring out the distinction between them as required earlier. Meanwhile, among other amendments, SEBI has said that every asset management company should maintain and preserve its books of accounts, records and documents for a period of eight years instead of the 10 years as required earlier. SEBI has also said that in order for trustees to comply with the regulations, they should call for thedetails of transactions in securities by the key personnel of the asset management company (AMC) in their own name or on behalf of the AMC on a six-monthly basis.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
