Sebi Tightens Rules to Curb Fraudulent Mutual Fund Trades
By Rediff Money Desk, NEWDELHI Apr 30, 2024 18:09
Sebi board amends mutual fund norms to strengthen surveillance and deter market abuse, including front-running and fraudulent transactions.
![Sebi Tightens Rules to Curb Fraudulent Mutual Fund Trades](https://im.rediff.com/money/2022/may/17sebi.jpg)
Photgraph: Shailesh Andrade/Reuters
New Delhi, Apr 30 (PTI) Sebi board on Tuesday decided to amend norms governing mutual funds, whereby asset management companies (AMCs) need to put in place an "institutional mechanism" for identification and deterrence of potential market abuse, including front-running and fraudulent transactions in securities.
The mechanism should consist of enhanced surveillance systems, internal control procedures, and escalation processes to identify, monitor and address specific types of misconduct, including front running, insider trading, and misuse of sensitive information, Sebi said in a statement issued after the conclusion of the board meeting.
With a view to address the issues faced by venture capital funds (VCFs) registered under the erstwhile VCF norms with respect to their inability to fully liquidate the investments of their schemes within the tenure of the scheme, the Sebi's board has approved a proposal to provide an option to such VCFs to migrate into AIF (Alternative Investment Fund) rules and avail the facilities available for AIFs to deal with unliquidated investments.
The mechanism should consist of enhanced surveillance systems, internal control procedures, and escalation processes to identify, monitor and address specific types of misconduct, including front running, insider trading, and misuse of sensitive information, Sebi said in a statement issued after the conclusion of the board meeting.
With a view to address the issues faced by venture capital funds (VCFs) registered under the erstwhile VCF norms with respect to their inability to fully liquidate the investments of their schemes within the tenure of the scheme, the Sebi's board has approved a proposal to provide an option to such VCFs to migrate into AIF (Alternative Investment Fund) rules and avail the facilities available for AIFs to deal with unliquidated investments.
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