MINISTER OF STATE IN THE MINISTRY OF FINANCE (SH. S. S. PALANIMANICKAM)
(a), (b), (c) & (d) : SEBI has stated that following two types of
practices related to sales and distribution of mutual fund products
have come to their notice:
(i) They have understood from media reports that some of the
distributors are encouraging investors to frequently switch from
one scheme to the other in order to enhance their commissions.
However, no specific complaint regarding this has been received
by them from any investor.
(ii) One of the Mutual Funds namely Principal Mutual Fund was
advertising exceptionally high rates of dividends months in advance
before actual announcement of dividend in order to attract
investors. On noticing, they wrote to the mutual fund to
immediately withdraw all such sales material and advertisements.
The fund complied with the SEBI directive and also paid the
declared dividend to the investors, on November 2, 2005 instead
of the advertised date in February 2006.