SEBI Circular on Mutual Fund Warning

Taking a note of the hasty and unintelligible manner in which the Mutual Fund advertisers warn about the market risks associated with Mutual Funds, the SEBI has issued a circular bearing no. SEBI/IMD/CIR No.12/118340/08 Dated 26.02.2008 setting guidelines for the manner in which such warning/message is to be conveyed.

The circular states that –

– The time for display of the standard warning be over a period of five seconds in case of audio advertisements and shall be read in an easily understandable manner.

– In case of audio visual advertisements the time for display and voice over of the standard warning be enhanced to five seconds.

All mutual funds are required to comply with the above requirements in letter and spirit.

So with effect from April 1, 2008, expect the statement – “Mutual Fund investments are subject to market risks, read the offer document carefully before investing” to be recited in an intelligible manner . This step of SEBI is definitely appreciable.