The Anil Ambani group (ADAG)-owned Reliance Mutual Fund today said it had withdrawn an advertisement of its new scheme following a show-cause notice by the market regulator, Sebi.
“...The advertisement in question has been withdrawn, and a revised advertisement will be released starting tomorrow," a Reliance MF spokesperson said.
In an order yesterday, Sebi had asked Reliance MF to explain violations of norms in its advertisement for its infrastructure fund to avert action by the market watchdog.
The spokesperson said, “We will file our response to Sebi within the prescribed time of 15 days to establish that there has been no violation of applicable SEBI guidelines.”
The spokesperson added that the Reliance Infrastructure Fund NFO will close as announced on June 23, 2009.
In one of the first orders after it applied brakes on speed-reading of the standard warning in mutual fund advertisements, Sebi has issued a showcause notice to Reliance Mutual Fund, the country’s largest, and Reliance Capital Asset Management, to explain why they should not be barred from launching any new scheme.
Sebi has also asked Reliance to withdraw the promotional ad for its newly-launched Reliance Infrastructure Fund. Sebi’s order says the ad violated the norms stipulated in an earlier notification, of February 2008.
In that order, Sebi had directed that the time for display and voice-over for the standard warning in audio-visual advertisements must be at least five seconds. The Reliance ads in question now, says Sebi, are less than this.
Further, ads for every new scheme need to be filed with the regulator within seven days from the date of issue. However, Reliance MF filed the compact disc for its NFO only on June 3, even though this was opened on May 25.
A Reliance MF spokesperson said they’d file a response to Sebi within the prescribed time of 15 days, establishing that there had been no violation of applicable norms. The company will meanwhile issue a revised ad from tomorrow. The Reliance Infrastructure Fund NFO will close on June 23, as announced. The background of the Sebi order was a number of MF ads on TV being fast-paced on the disclaimer part: “Mutual fund investments are subject to market risks; please read the scheme information document carefully before investing.”
Hence, Sebi had to stipulate a minimum time for reading or showing the disclaimer.
“The rapid-fire manner in which the standard warning is recited in the audio visual does not give the understandable information. This leads to a situation where the investors are not able to get informative investment decisions,” Sebi had said in issuing its February 2008 stipulation.