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SEBI Orders Mutual Funds To Stop Using Deceptive Illustrations In Advertisements: Report

Asset Management Companies have been asked not to indulge in these practices in near future

Securities and Exchange Board of India (SEBI) has reportedly instructed mutual fund companies to stop using ambiguous pictures or illustrations in its commercials, advertisements, brochures, presentations, The Economic Times reported . According to the market regulator, the graphics used in the commercials, presentations, booklets, and pamphlets could mislead investors into thinking they will earn set returns on their investments.

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 “It has been noticed that some of the Asset Management Companies are indulging in practices relating to advertisements, which are not in letter and spirit compliance with the Advertisement Code prescribed in SEBI (Mutual Funds) Regulations, 1996,” SEBI said in a statement.

Such disclosures/advertisements violate the letter and spirit of the rules of the Sixth Schedule of the SEBI (Mutual Funds) Regulations, 1996 and are likely to be misconstrued by investors. 

As per SEBI, “Disclaimers and assumptions are in fine print that are likely to be missed out by the investors.” 

Asset Management Companies have been asked not to indulge in these practices in near future. Additionally, they are also ordered to remove such graphics advertisements/presentations/pamphlets and brochures from all the advertising mediums. 

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