Mumbai The Securities and Exchange Board of India will soon announce disclosure norms for asset management companies, angered by the way Axis Mutual Fund has handled the suspension and termination of two fund managers allegedly involved in front-running.
A senior regulatory official, on the condition of anonymity, said, “Sebi is working on when and how disclosures should be made in such circumstances. SEBI is of the view that the more disclosures, the better. Hence, Something similar (for norms applicable to listed companies) will be made mandatory for fund houses if fund managers are asked to exit, or there are some major management changes in fund houses/specific schemes. SEBI Mutual The fund department is working on some. These new norms will be announced soon,” said the person.
Axis Mutual Fund last week sacked two fund managers- Viresh Joshi and Deepak Agarwal, who were suspended on May 4 for alleged misconduct, pending investigation.
The fund house issued two statements announcing the change in fund managers, but the disclosure did not provide details as to why the changes were made.
The statement issued on the termination of his services did not shed any light on whether Axis Mutual Fund had completed the automatic investigation and on what grounds he was terminated, leaving room for speculation on whether They were on the move or fallback and on the shape of the manipulation.
“Axis initiated automatic inquiry against two officials in the month of March, but suspended them only after media scrutiny and issued a press statement. Noting that SEBI is working on industry level changes, Axis will also be forced to issue a more detailed statement,” said a person with knowledge of the matter.
“For listed companies, we have LODR (Listing Obligation and Disclosure Requirement), which takes care of disclosures for listed companies. But there is nothing like a mutual fund for events that affect unitholders. Having said that, when information becomes important for a unitholder, there are certain things to be considered,” the official quoted above.
According to Amit Tandon, chief executive of Institutional Investor Advisory Services (IIAS), a proxy advisory firm, fund houses should make the same disclosures as they do to the companies in which they invest.
“The rule of thumb is to disclose everything and in precise detail as fund managers expect from listed entities. Therefore, it would be in the interest of the unitholders to rely on LODR with certain exceptions and additional parameters.”
However, when a whistleblower complaint becomes significant and when it should be disclosed remains a question even for listed companies.
“There may be complaints from many whistleblowers, and many will be dismissed without merit, making disclosures a bit difficult. Listed companies usually disclose complaints (whistleblowers or others) in their annual reports. But is that enough? Is that something the regulator is debating,” said the second person cited above.