The Securities and Exchange Board of India has directed Reliance Capital Asset Management to withdraw the advertisements for its newly-launched fund recently-launched Reliance Infrastructure Fund as it spends less time on risk warnings ("mutual fund investments are subject to market risks, please read the..." ) than required.
The asset management company has also been pulled up for not submitting the clippings of the ad to SEBI on time, and has been asked to explain why it should not be restrained from coming out with fresh offerings.
In a notice late February last year, SEBI had asked fund firms to more than double the time they spent on risk warnings to investors in their radio and television commercials to five seconds.
However, the disc submitted by the firm shows the display and voiceover time of the statuory warning in the advertisement for Reliance Infrastructure Fund is less than five seconds, the regulator said in a notice posted on its website late on Wednesday.
SEBI also said the firm took more time than the required seven days of opening of issue to submit the advertisement.
The market regulator, in its ex-parte order passed by whole-time member Prashant Saran, has directed the mutual fund to withdraw the advertisement in its current form and reissue it.
"The rapid-fire manner in which the standard warning "Mutual Fund investments are subject to market risks, please read the scheme information document carefully before investing" is recited in the audiovisual renders it unintelligible. This leads to a situation where the investors are not able to take well-informed investment decisions," SEBI said.
Agencies have quoted a Reliance MF spokesperson as saying that the MF has withdrawn the advertisement. "We will file our response to SEBI within the prescribed time of 15 days. Meanwhile, a revised advertisement will be released starting tomorrow. The Reliance Infrastructure Fund NFO will close on June 23, 2009 as announced," the spokesperson said.