Sebi proposes measures to curb mis-selling in alternate investment funds

Under the recommendations, commission to be charged on trail basis

The Securities and Exchange Board of India (Sebi) has proposed measures to curb mis-selling in Alternate Investment Funds (AIFs) including mandatory offering of direct plans and introduction of trail model for distribution commission.
 

The regulator has said that in certain cases the quantum of upfront commissions for AIF distribution fees has gone up to around 4-5 per cent of committed amount.
 

“Such high upfront commissions, particularly in sharp contrast to the trail commissions for other products, increase the chances of mis-selling of AIF schemes,” noted Sebi.
 

In a discussion paper issued on Friday, Sebi has proposed on adopting a trial