In a letter to the Association of Mutual Funds in India (AMFI), the Securities and Exchange Board of India (SEBI) has reportedly raised questions concerning 23 practices for breaching the mutual fund regulations.
The regulator’s inspection team reviewed various practices during the period 1 April 2016 to 31 March 2017. The team found over 23 exercises that violated or was non-compliant with the regulator’s existing framework.
Some of the practices that SEBI pointed out in the letter included investors’ interests being dishonoured by providing false reports on investor complaints. The inspected team also observed instances where the funds allocated for investor education was being utilised inappropriately.
SEBI’s primary objective is to safeguard investors’ interests while preventing malpractices in the investment market.
The inter-scheme transfers, monitored by the regulator, have also been utilised by some MFs for debt securities’. In a letter addressed to AMFI, SEBI warned MFs of action if corrective measures are not taken concerning the observations made by the regulator’s inspection team.
The letter also mentioned practices where AMFI-suspended distributors were continuing business with Asses Management Companies (AMCs). Furthermore, some AMCs had also failed to stop paying commission to the suspended distributors.