Feb 2, 2000|
SEBI gives the boot to Shriram MF trustees
In an unprecedented move, the Securities and Exchange Board of India (SEBI) has sacked the board of trustees of the Shriram Mutual Fund.
According to a news reports that appeared earlier, the asset management company (AMC) of Shriram Mutual Fund (MF) had bought shares of Videocon International at a higher price (of Rs 84), while the existing market price on that day was Rs 62. The AMC is alleged to have done this to bailout certain BSE brokers during a payment crisis, with the understanding that the brokers would buy the shares back at a later date.
SEBI has asked the Sponsors – The Shriram Group to pay Rs 2.5 m to make the good the losses. SEBI has also asked the two officials of the investment committee to step down. Three of the four trustees have been asked to resign immediately while one has been asked to step down after a year so as to ensure continuity in decision-making.
SEBI has set a precedent and a strict one at that by sacking the board of trustees. This will serve as a warning to other AMCs and will ensure that such malpractices are not resorted to in future. SEBI must continue to play an active role in future so as to ensure that MFs play fair and square given the fact that they are dealing with investors’ funds.
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