Securities and Exchange Board of India (Sebi) warned mutual fund management companies against misleading people by promising assured returns and asked them to fall in line with the Sebi MF regulations.
SEBI MF regulations stipulate that no mutual fund managers can assure guaranteed returns on investments.
In a recent letter to the trade body for the MF industry, the Association of Mutual Funds of India (AMFI), the regulator said it noticed advertisements, brochures and pamphlets that were distributed promising fixed returns for SIPs ( systematic investment plans and added that these are in violation of SEBI (Mutual Funds) Regulations, 1996.
“It has been noticed that some of the Asset Management Companies are indulging in practices relating to advertisements, which are not in letter and spirit compliance with the Advertisement Code prescribed in SEBI (Mutual Funds) Regulations, 1996,” the letter read, reported Economic Times.
Sebi said such advertisements will make investors believe that they will get fixed returns on their investments and pointed out that even when there are disclaimers, they are in such fine print that most people are likely to miss them.
The regulator asked mutual fund companies to refrain from using ambiguous and misleading advertisements and remove presentations, pamphlets, and brochures that are already in the media.
