The Securities and Exchange Board of India (Sebi) has warned HSBC Mutual Fund, its chief executive officer and the trustees to comply with the regulatory norms for asset management companies. The warning comes after the regulator found that that HSBC Mutual Fund failed to inform investors before making fundamental changes in its HSBC Gilt Fund.
"It was brought to the notice of SEBI that the name and the benchmark index of the scheme were also changed and that the investors were not informed of the sudden changes in the scheme," says the 18-page Sebi order. There were also reports in the media that the fund had shifted nearly 80 per cent of its assets from ultra short term to long term bonds and that the actual portfolio duration exceeded 12 years in January 2009.
"Though the fund/AMC have cited liquidity crisis and the corresponding volatility of the assets under management, as the reasons for increasing the duration, the same according to me is a very important factor which could have influenced the decision of the investors/unitholders on whether to remain invested in the scheme or to exit," said the order.