Disclose all risks in bold letters in MF ads: Sebi

Market regulator the Securities and Exchange Board of India (Sebi) today asked mutual fund companies to make all the disclosures about market risks involved in the products more prominent in their communication.

"To make these statements more prominent, it is advised that the disclosures as stated in the clauses 10, 13 and 14 of schedule VI of Sebi (Mutual Funds) Regulations of 1996 on Advertisement Code shall be printed in bold," the regulator said in a circular here today.

The clauses 10, 13 and 14 of the regulations ask the asset management company (AMC) to inform the investor that all investments are subject to market risks and the objective of the fund may not be achieved.

These rules also mention that AMCs should tell investors while giving an ad that the name of the scheme does not in any manner indicate either its quality or its future prospects or returns and also to ask the investors to 'please read the offer document before investing'.

The clause 14A of the regulations also notes that the ad should be shown in full and not only some product extracts.

In fact, clause 14B also stipulates that no celebrity would be a part of the commercial.

The Sebi, however, has noted that the ads issued are generally lengthy and the disclosures are not bought to the attention of the investors.