Bombay HC issues notice to SEBI over PIL challenging AMFI Mutual Fund ads

New Delhi: The Bombay High Court has issued a notice to the Securities and Exchange Board of India (SEBI) concerning a Public Interest Litigation (PIL) challenging mutual fund advertisements by the Association of Mutual Funds in India (AMFI). 

The notice comes in response to a petition filed by Chandrakant Shah, a chartered accountant, who has accused AMFI of misleading the public with its campaigns.

As per news reports, the PIL argues that AMFI has been recklessly promoting mutual funds under the guise of investor education without sufficient basis or rationale. Specifically, Shah targets the popular slogan "Mutual Funds Sahi Hai," which he claims misleads investors by suggesting that mutual funds are inherently a safe or correct investment choice without adequately addressing the associated risks.

The petition further alleges that AMFI's advertisements serve more as commercial solicitations for its member companies rather than genuine investor education. 

Shah seeks directives for SEBI to withdraw the permissions granted to AMFI for such advertising, emphasising that these ads do not align with the regulatory body's mandate to protect investor interests and promote market integrity.

In court, Shah highlighted that, unlike advertisements from other financial institutions like the Reserve Bank of India (RBI) or the National Stock Exchange (NSE), which focus on public service without commercial intent, AMFI's ads are seen as having a direct commercial motive. He argued that this approach could potentially mislead investors, particularly those less financially literate, into making investments based on incomplete or skewed information.

The Bombay High Court, recognising the public interest at stake, has appointed an amicus curiae to assist in the matter and has directed notices to both SEBI and AMFI.