Market regulator SEBI today asked mutual fund arms of Anil Ambani Group (ADAG) to explain why they violated prescribed advertising norms in launching a new scheme to avert any action. In a show cause notice, SEBI asked Reliance Mutual Fund and Reliance Asset Capital Management why there should not be a "restraint" on any new scheme by them in view of violations in audio visual advertisement of an infrastructure fund. "Reliance Mutual Fund and Reliance Asset Capital Management Limited are directed to show cause as to why they should not be restrained from launching any new schemes for an appropriate period for violations," SEBI said in its order yesterday. SEBI also asked these companies to withdraw the advertisement immediately in the current form and issue it again as per the regulator's norms. As per the SEBI's norms, any audio visual advertisement for mutual funds should display standard warning for five seconds so that investors are able to take well informed investment decisions. However, the time for display and voice over of the standard warning in the advertisement for Reliance Infrastructure Fund is for less than five seconds and thus not in compliance with the SEBI norms, the order said.
"The rapid fire manner in which the standard warning 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 decision... This is a serious violation," the order said. Besides, market regulator's norms also require companies to submit these advertisements to SEBI within seven days from the date of issue. However, Reliance Mutual Fund has submitted the compact disc of advertisement clippings for new fund offer (NFO) on June 3 even when the NFO opened on May 25. SEBI said its order may be treated as a show cause notice and Reliance Mutual Fund and Reliance Capital Asset Management Limited may submit their reply within 15 days. The companies may seek personal hearing in the matter.
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