The Hindu Business Line : SEBI forms new rules for MF ad warnings

Mumbai, Feb. 27 The Securities and Exchange Board of India has put a speedbreaker on the haste with which mutual fund advertisements deliver their standard warnings.

“Mutual fund investments are subject to market risks, read the offer document carefully before investing” must now be displayed and read out for at least five seconds in television and radio ads, said SEBI, in a circular.

Currently, the warning could take up as little as 10 per cent of the time in a 20-second ad, said Mr Raghvendra Nath, Vice-President, Marketing & Strategy, Birla Sun Life Mutual Fund.

“The rapid-fire manner in which the standard warning is recited in the audio visual and audio media renders it unintelligible to the viewer/listener,” said the SEBI circular.

The new guidelines have been decided in consultation with Associations of Mutual Funds in India. “Our costs would go up but this is something we will have to comply with,” said Mr Arindam Ghosh, Chief Executive Officer, Mirae Asset Management.

At a recent awards ceremony, Dr C. Rangarajan, chairperson of the Economic Advisory Council to the Prime Minister, had remarked on the issue, saying that “the rapid-fire manner in which it is read out only shows that the warning is suppressed.”

“The duration of a warning does not ensure that investors have understood the real risks behind investing; all mutual funds can do is to adhere to SEBI’s directive,” said the Chief Investment Officer of a mutual fund house.

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