PIL in Bombay HC seeks action against 'Mutual Fund Sahi Hai' ads by Amfi

Mumbai, Dec 20, 2024

The petitioner, a chartered accountant, has alleged that Amfi is 'recklessly propagating that mutual funds are right without any basis or rationale'

A Public Interest Litigation (PIL) filed in the Bombay High Court has sought directions to the Securities and Exchange Board of India (Sebi) to revoke the permissions granted to the mutual fund body Association of Mutual Funds in India (Amfi) and to desist from ‘misleading’ and ‘deceptive’ advertisement campaigns under the investor education and protection measures.

The petitioner, a chartered accountant, has alleged that Amfi is ‘recklessly propagating that mutual funds are right without any basis or rationale’.

“The ad campaigns are completely unfounded, reckless, false, baseless, and misleading, with selective and distorted emphasis on positive features,” alleges the petitioner.

Comparing the advertisements by Amfi to those of other institutions such as the Reserve Bank of India (RBI), National Stock Exchange (NSE), and Sebi itself, the petitioner has submitted that the aforementioned ads do not solicit any business, do not have any commercial motive, and are intended to ‘truly’ serve the public good, unlike the Amfi ads which have a commercial motive.

“There is no element, whatsoever, of investor education or awareness in the ad campaigns propagated by Amfi. These ad campaigns do not highlight or mention the features and characteristics of mutual funds, their limitations/constraints, etc., but only emphatically endorse and opine that mutual funds are right (sahi hai) without any basis or merits, with a small sidelined disclaimer,” states the petition.

The petitioner has added that such endorsements are commercial in nature and meant only to benefit the members of Amfi, with the least concern for investor protection.

Legal experts said that the High Court has sent a notice to the market regulator on the matter.

[The Business Standard]