A mini controversy a la the Lok Pal is brewing in the financial capital. The lone civil society member in the Sebi panel studying changes in the mutual fund industry has shot off a letter to panel chairman Prashant Saran, saying final recommendations could not be made without taking into account the views of the investing public represented by him.
Narendra Mehta, general secretary of Investors’ Grievances Forum, wrote this letter as he did not attend the meeting of the panel held on June 3, according to sources. It is not clear whether he boycotted the meeting due to differences over the conduct of the panel or due to other reasons.
Mehta confirmed he did not attend Friday’s meeting. “I have written to them. Mr Saran is yet to respond,” he added. Other panel members, including Sebi officials, were not available for comments.
Mehta had fiercely objected to proposals to bring back loads through the back door in the panel’s earlier meetings. Most investor associations had been sceptical about the structure and objectives of the seven-member panel ever since it was formed in April.
A Business Standard poll conducted last month found most associations felt the panel was crowded with industry members and investors were inadequately represented.
Now, the fact that even that lone member has been kept out has shocked many.
The seven-member panel was headed by Prashant Saran, whole-time member, Sebi.
HN Sinor, CEO, Association of Mutual Funds of India (Amfi), G Sethu, a MF trustee, V Ganesh, CEO, Karvy Computer Share Ltd, an MF registry, Dhirendra Kumar, CEO, Valueresearch, an online research firm, and S Ravindran, GM, Sebi, were its other members. In the initial meetings, Amfi argued for the return of transaction fees and the single-cheque system, wherein the investor paid the manufacturer and distributor through a single cheque.
In a detailed presentation, Karvy had proposed a transaction fee in the range of Rs 100-150 per transaction and some changes in the rules governing new fund offers. It had also suggested that common account statements would make MFs unattractive for sellers vis-a-vis other products, such as Ulips.
Mehta had opposed all these measures as anti-investor and suspected a back door entry of entry loads. He had suggested measures to make the mutual funds and distributors accountable before they were given incentives, sources said.
According to people in the know, when the date of the meeting was proposed as June 3, Mehta claimed he had prior commitments and wanted it to be rescheduled. However, a senior member of the panel said he would not be available in Mumbai between June 4 and June 15 and resisted the change of date.
The panel has to submit its final recommendations by June 15, in time for the Sebi board meeting scheduled for later this month to consider the proposals. This forced the panel to go ahead with the June 3 meeting without Mehta. According to sources, Mehta has asked the panel to send him the minutes of the latest meeting. He is likely to take a final call after going through the minutes.
