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Sebi tightens investment norms for MF employees, directors

The Securities and Exchange Board of India has tightened norms for investment disclosure standards for directors and employees of mutual funds.

"Mutual fund employees involved in research, dealings and investment decisions would now have to take prior permission (15 days in advance) before making investments," B G Deshmukh, chairperson of Sebi's mutual fund committee, told newsmen after its meeting in Bombay on Tuesday.

These employees would have to make transactions on delivery basis and be required to retain the purchased securities for at least 60 days, he said.

Deshmukh said asset management company directors would have to report the investment transactions of values exceeding Rs 100,000.

Sebi would issue detailed guidelines for investment disclosure by mutual fund employees shortly, he said, adding that "the norms are being made stricter to create public confidence and improve ethical standards for mutual fund industry."

Employees working in areas like distribution and back office operations would have to submit statements for holdings and investment transactions annually.

All mutual fund employees have been barred from indulging in short sales.

Employees would mean persons working with mutual fund company, his/her spouse, dependent children and Hindu Undivided Family (HUF), Deshmukh said.

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