The Securities and Exchange Board of India (Sebi) has asked mutual fund houses to clearly mention the actual commission, including gifts and junkets, given to distributors against the investments of an individual. In a circular sent to all fund houses on Friday, the market regulator said this information should be included in the six-monthly Consolidated Account Statement (CAS) issued to investors.
“The term ‘commission’ here refers to all direct monetary payments and other payments made in the form of gifts, rewards, trips, event sponsorships etc. by fund houses to distributors,” the circular clarified. Fund houses will also have to mention in the statement the total expense ratio of the schemes in which an individual has invested.
Sebi also wants mutual fund houses to disclose the remuneration of the chief executive officer, chief investment officer and chief operations officer on their websites. Also, they will have to disclose names of employees earning more than Rs 60 lakh a year or Rs 5 lakh a month if employment is for part of the financial year.
In another blow to the industry, the circular says that fund houses will not be allowed to charge fund management expenses for deploying NFO proceeds in CBLO during the NFO period. “The appreciation received from investment in CBLO shall be passed on to investors. Further, in case the minimum subscription amount is not garnered by the scheme during the NFO period, the interest earned upon investment of NFO proceeds in CBLO shall be returned to investors, in proportion of their investments, along-with the refund of the subscription amount,” the circular said.