ABSTRACT
Security market regulation violations should be dealt with seriously because it involves public money and deviations will lead to large-scale economic repercussion. Mutual Fund (MF) stakeholders such as Asset Management Companies (AMC) have the duty and responsibility to adhere and comply with the rules and regulations stipulated by the regulators, run in accordance with governance standards, maintain transparency, and make money and wealth for its investors. However, at times, they are found to be deviating from norms and causing losses to investors, and putting investor trust and confidence to the test. This paper examines and documents some deviations found in the mutual fund industry and how regulators dealt with them. We study several deviations that were unearthed from the famous 2003 US Mutual Fund Scandal and later from the 2010 front-running episodes in India. We also examine several incidents as observed in the Indian mutual fund industry and how SEBI dealt with them. This study is significant in the Indian context because it is witnessing an increased inflow of money, mostly from small retail investors. Strong regulations act as an essential foundation and the architectural plan of an investment building which investors build by pooling up their hard-earned money as bricks with the help of a mason called the fund manager. This paper gives some suggestions to regulators to make the foundation much stronger and everlasting.
Keywords: Mutual funds, mf regulations, securities market, regulator, SEBI
Received : 10th December 2021
Accepted : 15th December 2021
Published : 25th January 2022