Sebi chief urges MF trustees to ensure fair fees, stronger oversight

Mumbai: The Securities and Exchange Board of India (Sebi) has asked mutual fund trustees to ensure that fees and expenses charged to investors are fair.

The Sebi chief on Monday said trustees are the first line of defense in ensuring the integrity of systems, from valuation practices to risk management.

"You ensure that valuations are fair, that fees and expenses are justified, and that every investor - large or small - is treated equitably," Sebi chief Tuhin Kanta Pandey said. He was speaking at the Leadership Dialogue for Trustees of Mutual Fund.


"When needed, trustees are empowered to act-to question, to escalate, and, if necessary, to intervene. This authority carries with it the moral duty to act decisively and fearlessly, to protect the interests of investors," he said.

Pandey added that when compliance reports are submitted by asset management companies(AMC), trustees must independently test controls, seek explanations, and challenge assumptions.

"Trustees must ensure robust early warning systems-mechanisms that detect anomalies, track exceptions, and trigger timely interventions," he said.

The regulator recently delineated the roles of trustees and AMC boards.

Trustees are now expected to undertake independent evaluation and due diligence, while AMC Boards are required to establish a unitholder protection committee.

Mutual funds have been mandated to establish structured mechanisms to prevent market abuse, including front-running, insider trading, and misuse of sensitive information.

"Trustees are expected not just to verify the presence of such mechanisms, but to ensure they function in spirit and in substance," Pandey said.