Sebi asks mutual funds to stop using misleading illustrations in advertisements

Securities and Exchange Board of India or Sebi has asked mutual funds to stop using misleading illustrations in advertisements, brochures, presentations, among others.

“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.

The market regulator said illustrations provided in the advertisements/ presentations/ brochures/ pamphlets would lead investors to believe that they will receive fixed returns on their investments.


Sebi said these illustrations are shown depicting future returns on the basis of assumptions and projections. “Disclaimers and assumptions are in fine print that are likely to be missed out by the investors,” Sebi said.

“Such disclosures/advertisements are ambiguous and likely to be misunderstood by the investors and are not in compliance with letter and spirit of the provisions of Sixth Schedule of SEBI (Mutual Funds) Regulations, 1996”, Sebi said.

It asked AMCs to refrain from such practices in future and remove such advertisements/presentations/pamphlets and brochures from all the medium and to advise their distributors not to use such advertisements/presentations/pamphlets and brochures.

It asked AMCs to refrain from such practices in future and remove such advertisements/presentations/pamphlets and brochures from all the medium and to advise their distributors not to use such advertisements/presentations/pamphlets and brochures.