PIL filed in Bombay HC against AMFI's ads promoting mutual funds

A public interest litigation has been filed in the Bombay High Court, seeking directions to the Securities and Exchange Board of India (SEBI) to revoke the permissions granted to the Association of Mutual Funds in India (AMFI) for its alleged “misleading” and “deceptive” advertisement campaigns under investor education and protection measures.  

The petitioner, a chartered accountant, claimed that AMFI is “recklessly propagating that mutual funds are right without any basis or rationale.” “The ad campaigns are completely unfounded, reckless, false, baseless, and misleading with selective and distorted emphasis on positive features,” the petitioner alleged.  

On December 18, the Bombay High Court appointed an amicus curiae to assist in the matter, considering the public interest involved, and issued notices to SEBI and AMFI.

Comparing the advertisements by AMFI to those of other institutions such as the Reserve Bank of India (RBI), National Stock Exchange (NSE), and SEBI itself, the petitioner stated that the aforementioned ads do not solicit any business, don’t have any commercial motive, and are “truly” intended to serve the public good, unlike the AMFI ads, which have a commercial motive.

“There is no element, whatsoever, of investor education or awareness in the ad campaigns propagated by Amfi. These ad campaigns do not highlight or mention about the features and characteristics of mutual funds, its limitations/constraints, etc., but only emphatically endorse and opine that mutual funds are right (sahi hai) without any basis or merits, with a small sidelined disclaimer,” states the petition.

The petitioner has added that such endorsements are commercial in nature and are meant solely to benefit the members of AMFI, with little regard for investor protection.