Updated on: Saturday, June 01, 2019, 05:32 AM IST

Mkt regulator mulls fresh checks on mis-selling of mutual funds


Mumbai : Regulator Sebi is considering fresh checks against mis-selling of mutual funds and flouting of ‘open bank infrastructure’ norms for sale of these financial products, while it looks at ways to boost the market penetration through use of mobiles and internet, reports PTI.

The Securities and Exchange Board of India (Sebi), which regulates over Rs 11-lakh crore worth mutual fund industry, has called a meeting of its Advisory Committee on Mutual Funds here today to look into various issues including those related to further development of this market while ensuring investor protection and better regulation.

The Committee, which includes representatives of various fund houses, industry body AMFI and banks along with independent experts, would discuss issues ranging from upfront commission for agents, potential mis-selling and unclaimed dividend and redemption amounts, among others.


However, one major issue likely to be discussed include flouting of guidelines with regard to ‘open bank architecture’ for sale of various mutual fund schemes through banks, sources said.

It has come to Sebi’s notice that various mutual funds are forcing their promoting banks to sell only their own funds, thereby defeating the purpose of ‘open bank architecture’ that all fund houses are required to follow.

According to the industry data, some banks are getting more than 50 per cent of their brokerage commissions from single MFs, indicating a special focus on selective fund houses, which mostly happen to be their own group entities.


The issue has already been raised by some fund houses on various forums including at the level of AMFI (Association of Mutual Funds in India) and with the regulator Sebi.

The open bank architecture means that the products of any fund house can be sold by any bank, irrespective of the said bank being a promoter entity for the mutual fund.

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Sebi widens black money probe

Mumbai : As Sebi widens its probe into use of stock market platforms for evading taxes and laundering black money, a large number of small NBFCs and brokers have come under its scanner for having facilitated illicit deals worth thousands of crores of rupees over the past 2-3 years.

Besides, a number of such entities, which includes both individuals and corporate brokerage firms, have been found to be repeat offenders for various offences in the securities market and many of them create new shell companies to hide their past precedents, sources told PTI.

In its biggest crackdown for suspected tax evasion and laundering of black money through stock trading platforms, Sebi on Friday barred 260 entities, including individuals and companies, from the securities markets.

Sebi found a typical pattern in trading of shares of these companies.

First shares were allotted on preferential basis to certain connected entities, price would be pushed higher without any fundamental move, followed by an exit being given to these investors and the shares would be sold back to the company or related entities raking in huge profits.


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Published on: Monday, December 22, 2014, 12:12 AM IST