The capital market regulator has asked asset management companies to be vigilant and monitor social media platforms to identify Telegram groups that pass themselves off as registered mutual funds or misuse the names of mutual funds.
Certain dubious groups have been observed on Telegram, a messaging app, with misleading or misrepresenting names of mutual funds, the Securities and Exchange Board of India said in a letter to fund houses. Moneycontrol has reviewed a copy of this letter.
In the letter, the regulator also mentioned some of the Telegram groups impersonating mutual fund houses. For example, Paytm Doubling Mutual Funds had 90,818 users, Paytm Doubling Funds Mutual 86,435 users, Tata Mutual Fund Investment 77,509 users and Close Friends Traders 65,723 users.
“In the course of such monitoring, if the AMC comes across any activities or posts on the social media which are dubious in nature and against the interest of investors of such entities, the AMC should take appropriate actions promptly, including issuing a press release/public notice, filing police complaint/FIR etc. to ensure that such entities/groups are prevented from misusing names of the mutual funds,” the regulator advised the fund houses.
Sebi asked AMCs to ensure that stakeholders such as distributors, brokers and investment advisors are also sensitised to perform similar due diligence and take appropriate action promptly.
“One is always vigilant and there are enough tools at the backend running to try and identify such cases, and when such cases come up, we take necessary action, including legal,” said Swarup Mohanty, director of Mirae Asset Investment Managers (India). “Cyber security laws in India are pretty strict, vigilant and quick. So, whenever incidents happen – and we’ve had one or two so far – we've seen swift action and immediate action.”
Mohanty said Mirae Asset Mutual Fund itself hasn’t seen any dubious accounts misrepresenting them on Telegram. However, there have been one or two instances of websites misrepresenting them, which were referred to the cyber cell.
According to experts, Sebi’s letter can be seen as an extension of a recent move to regulate unauthorised financial advice on social media platforms such as Twitter, YouTube, Instagram and Facebook. The regulator said recently it is working on guidelines for those providing financial advice on social media platforms.
“Not only on Telegram, but we are discussing regulations on social influencers as well. One should not see just this whole process of Telegram in isolation, as the regulator is looking at approaching the entire digital space in totality, which is always the right way of looking at it. People who do this have to be accountable and should be punished also, and if it is backed by law, then the process becomes very easy,” said Mohanty.
Mutual fund investors should remember the golden rules of investing:
• Mutual funds do not assure returns. It is illegal to promise returns from mutual fund investments.
• Mutual funds are market-linked products; both equity and debt. Their fortunes are connected with those of the markets. Even liquid funds, the least risky of all MF schemes, do not assure returns.
