sebi:WTM/KMA/IMD/242/03/2010
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Show cause notice dated September 7, 2009 disposed of with a direction to the noticees to strictly abide by SEBI's advertisement stipulations; no monetary penalty imposed.
Provisions invoked
- s. 19
- s. 11(1)
Regulations
- Reg. 25
- Reg. 30(1)
- Reg. 77
- Reg. 30
Parties
- ICICI Prudential Mutual Fund
- ICICI Prudential Asset Management Company Limited
- Chief Executive Officer of ICICI Prudential Asset Management Company Limited
- ICICI Prudential Trust Limited
Holding
ICICI Prudential Mutual Fund and its AMC contravened Clause 2(3) and Clause 2(5) of Section III of the Guidelines for advertisements by Mutual Funds issued vide SEBI Circular dated June 5, 2000, and Clause 3 of the Advertisement Code, and the CEO violated Regulation 25(6A) by failing to ensure compliance. The show cause notice was disposed of with a direction to comply strictly, without monetary penalty.
Full text
Page 2 of 8 said code and Clauses 2(3) and (5) of Section III of the Guidelines for advertisements by Mutual Funds issued vide SEBI Circular dated June 5, 2000. It was alleged that ICICI Prudential Mutual Fund and ICICI Prudential Asset Management Company Limited (hereinafter referred to as AMC) have violated Regulation 30 read with SEBI Circular dated June 5, 2000 and that the Chief Executive Officer of the AMC has failed to ensure that the mutual fund complies with the provisions of the relevant regulations, guidelines and circulars issued from time to time, in violation of 25 (6A) of the Mutual Funds Regulations. In view of the above, SEBI issued a notice dated September 7, 2009 requiring ICICI Prudential Mutual Fund and AMC (including its Chief Executive Officer) to show cause as to why appropriate action should not be taken against them. Thereafter, AMC, the Chief Executive Officer of AMC and ICICI Prudential Trust Limited filed separate replies, vide letters dated September 30, 2009. Their
Page 3 of 8 advertisements by Mutual Funds issued vide SEBI Circular dated June 5, 2000, by not complying with the following requirements: a. Only compounded annualised yield can be advertised if the scheme has been in existence for more than one year. b. The calculation of returns shall assume that all payouts during the period have been reinvested in the units of the scheme at the then prevailing Net Asset Value (NAV) and it should be clarified in the advertisements. c. All the advertisements displaying returns/yields must disclose in the main body of the advertisements, immediately after the returns/yields and in the same font that past performance may or may not be sustained in future. The aforesaid requirements flow from Clause 2(3) and (5) of Section III of the Guidelines for advertisements by Mutual Funds issued by SEBI, vide Circular dated June 5, 2000, which are reproduced below: “2. Performance Advertisement: If any mutual fund uses performance figures in any of its advertisements or sales literature or release/issue exclusive performance advertisements, such performance advertising must adhere to the following guidelines: 1. ……. 2…… (3) Only compounded annualised yield can be advertised if the scheme has been in existence for more than 1 year. For the calculation of compounded annualised yield the procedure prescribed in the Standard Offer Document shall be followed. All performance calculations shall be based only on NAV and the payouts to the unit holders. The ca
Page 4 of 8 that past performance may or may not be sustained in future. If the returns/yield are unrealistically higher due to extraordinary circumstances (e.g. rise/fall in interest rates) may be clarified in the advertisement. ……………..”
You have read the preview. Create a free account to read the full order, track this party, and analyse it in Ontology.
Free accounts include 10 searches/day with full order access.
Source: SecMarx — sebi:WTM/KMA/IMD/242/03/2010. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.