Lack of clear regulation led to an absurd tussle between SEBI and Reliance Mutual Fund over the duration of the statutory warning in the Fund’s ad.
Lack of clear-cut regulation from the Securities and Exchange Board of India (SEBI) on how to calculate the duration of the statutory warning (on the investment risks involved) in mutual fund advertisements has led to a frivolous tussle between Reliance Mutual Fund (RMF) and the market regulator. The tussle has ended with SEBI asking RMF to follow the rules, without being able to prove the precise nature of the violation.
The market watchdog had issued a show-cause notice to RMF and Reliance Capital Asset Management Ltd (RCAML) for Reliance Infrastructure Fund’s recent advertisement, saying that the statutory warning (“Mutual Fund Investments are subject to market risks, please read the scheme information document carefully before investing”) ran for less than 5 seconds, which violated the SEBI circular of 26 February 2008. RMF was asked to withdraw its advertisement immediately. RMF complied and thereafter ran a new advertisement in which the standard warning was for a duration of six seconds.
Dr KM Abraham, a member of SEBI, in his order issued on Wednesday, stated that RMF had failed to prove that the statutory warning in the advertisement ran for five seconds, even though SEBI, in its notice to RMF, did not mention the actual duration of the statutory warning. He could only claim that the statutory warning in the ad was meant for informing and protecting investors.
SEBI merely charged that the duration of the statutory warning in the CD submitted by RMF was less than 5 seconds. Besides, it argued that if RMF had complied with the SEBI circular, it would not have withdrawn the commercial immediately after the order! This is strange logic. It is as if a motorist, having being asked to pull aside, is asked to prove that he did not violate traffic rules. And also asked, if there was no violation, why did he pull aside?
The source for all this confusion is SEBI itself. While it is bothered that the statutory part of the ad must run for 5 seconds, it has not bothered to specify how to calculate this time period. In a hearing on 1 October 2009, the RMF counsel contended that the measurement of the audio-visual component ought to be from the point at which either the audio or the visual starts, to the point when the last of the two components stops. SEBI had no counter-argument to this view.
To bolster its case in this inane issue, RMF obtained an opinion from an ENT (Ear Nose and Throat) specialist who had stated that the advertisement submitted to SEBI was indeed coherent and comprehensible.
The SEBI circular dated 26 February 2008 increased the mandatory duration of the standard warning in audio-visual advertisements from two seconds to five seconds.
MITRA, an organisation representing NGOs, has written to the state CM demanding a CBI probe into the series of unsolved attacks on activists
Mumbai–based Movement against Intimidation Threat and Revenge against Activists (MITRA) has asked Maharashtra chief minister Ashok Chavan for a Central Bureau of Investigation (CBI) probe into the series of attacks on activists as well as the recent murder of right to information (RTI) activist Satish Shetty.
Pune-based Satish Shetty on Wednesday was killed at Talegaon on the outskirts of Pune. He was known to have opposed land deals for the Mumbai-Pune Expressway Project and mega-projects involving nefarious land deals in the Pune area.
MITRA, on behalf of all activists and non-government organisations (NGOs), has demanded a CBI probe into Mr Shetty’s murder and into the role of the police, politicians and builders and others with vested interests, who they allege could be responsible for the killing. It has also requested a personal intervention by the chief minister to probe the unsolved attacks on activists in Mumbai.
According to police officials, Mr Shetty was attacked with a sword by unidentified people while he was out for his morning walk today. He later succumbed to his injuries, after being rushed to a hospital.
A few days back, Citispace founder Nayana Kathpalia was attacked at her residence in Churchgate, south Mumbai. Reportedly, two men fired a round at her residence in the early hours of Friday last week, but no one was injured.
Moneylife had earlier reported on a series of attacks on activists in the past, which are still unsolved.
The Planning Commission has advised 'sensible' use of funds by the road transport & highways ministry, a day after minister Kamal Nath rebuffed the panel
In a war of words, the Planning Commission on Wednesday has advised 'sensible' use of funds by the road transport & highways ministry, a day after minister Kamal Nath rebuffed the panel.
"If available resources are used sensibly, then we will get a significant improvement in what has been going on," Montek Singh Ahluwalia, deputy chairman of the Commission told PTI.
Mr Nath had reportedly said yesterday that the Commission should confine itself to planning rather than commenting on road projects.
Mr Ahluwalia said that the Commission was there to do the task assigned to it. "We are here exactly for what we have been meant to do," he said.
"I think if they listen to our advice they can," he said in reply to a query whether the ministry was going to achieve the ambitious target to construct 32,936km of roads in the remaining period of the 11th Five Year Plan (2007-12), as announced by Mr Nath.
He, however, refused to comment on Mr Nath's remarks carried by a section of the media saying, "I am not aware that he (Mr Nath) has said anything about the Planning Commission. I don’t know where he said (it). He has not said that to me."
About the ministry's proposal for allocation of Rs10,000 crore to infrastructure finance company India Infrastructure Finance Company Ltd (IIFCL), Mr Ahluwalia said that it was meant to finance projects under public-private partnership (PPP) mode and not to government entities like the National Highways Authority of India (NHAI).
Earlier, the Commission had turned down a proposal from the ministry asking IIFCL to provide Rs10,000 crore to the NHAI.
"The note of the ministry proposes allocation of Rs10,000 crore from IIFCL to NHAI. This contradicts the stated purpose of IIFCL which is to provide supplementary financing to PPP projects and not to government entities. This proposal is not acceptable," Mr Ahluwalia had written to the ministry.
About the road ministry's progress, Mr Ahluwalia said, "We are reviewing it regularly. We are hopeful that we will get much better performance on roads this year."
Earlier, not impressed by the ambitious plans announced by Mr Nath, the Commission had advised the ministry to fix a 'reasonable’ target for construction of roads this year.
It pointed out to the ministry that it would not be able to award road construction contracts for more than 3,794km in 2009-10 against a target of 12,652km.
The ministry, the communication said, should adopt a programme fully in line with prime minister Manmohan Singh's Independence Day statement in which he had said, "Initiate action to construct 20 km per day (7,500 km per year).”
Mr Nath had unveiled his ministry's work plans for award of projects to construct 32,936km of roads by 31 March 2012.
Terming it "unrealisable", the Commission had suggested that the target be reduced to 19,250km.
Mr Nath has made several announcements, including construction of 35,000km of highways in five years and award of several mega-projects, besides investment of Rs2 lakh crore in the sector over the next two years.