Prashant Saran (Whole Time Member). Case: 1. In Re : Reliance Mutual Fund, 2. In Re : Reliance Capital Asset Management Limited Vs. Securities and Exchange Board of India
| Case Number | Prashant Saran (Whole Time Member) |
| Issue | Securities and Exchange Board of India Act, 1992 - Sections 11(1), 11(4)(b), 11(B), 19; Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 - Regulations 30(1), 77 |
| Judgement Date | June 03, 2009 |
| Court | Securities and Exchange Board of India |
Judgment:
Prashant Saran (Whole Time Member)
The Order of the Court was as follows:
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In exercise of the powers conferred under Section 11(1) of Securities And Exchange Board Of India Act, 1992 (SEBI Act, 1992) SEBI issued Circular No. IMD/CIR No. 12/118340/08 dated February 26, 2008 under Regulation 77 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 (hereinafter referred to as Mutual Fund Regulations) to all Mutual Funds registered with SEBI.
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The said Circular inter alia provides as under:
"With effect from April 1, 2008...the time for display and voice over of the standard warning be enhanced to five seconds in audio visual advertisements."
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Further, in terms of Regulation 30(1) of the Mutual Fund Regulations, it is required that inter alia advertisements in respect of every scheme have to be submitted to the Board within 7 days from the date of issue. However, Reliance Mutual Fund has filed the Compact Disc with respect to the advertisement clippings being telecast regarding the New Fund Offer (hereinafter "NFO") of "Reliance Infrastructure Fund" with the Board only on June 3, 2009 even when the NFO opened on May 25, 2009.
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From the submitted Compact Disc it is observed that time for display and voice over of the standard warning in the audio visual is less than five seconds and thus not in compliance with the requirements of the said Circular.
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The rapid fire manner in which the standard warning "Mutual Fund investments are subject to market risks, please read the scheme information document carefully before investing" as recited in the audio visual renders it unintelligible. This leads to a situation where the investors are not able to take well informed investment decisions.
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This is a serious violation. Therefore, in order to protect the interest of the investors and for orderly development of the securities market, urgent directions in this regard need to be issued. Further, in order to ensure that such...
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