Sebi issues guidelines for trading and investment by AMC employees

Sebi has barred senior employees and directors of asset management companies and their trustees from buying or selling mutual fund units while having access to any non-public information, such as winding up of schemes.

The move comes in the wake of the Franklin Templeton episode where Sebi observed some senior officials, directors of the asset manager and its trustee company redeemed their investments ahead of the winding up of the six debt funds.

The regulator said in a circular that senior executives should refrain from purchase or sale of mutual fund units, where any information available to the mutual fund–which could materially impact the NAV (net asset value) or interest of unitholders– is not yet communicated to the unitholders. It said scenarios such as a change in the investment objectives of the concerned mutual fund scheme, restrictions on redemptions, winding up of schemes, material change in the liquidity position and default in the underlying securities is material to the concerned mutual fund scheme.

The regulator said prior approval for personal investment transactions should be obtained by senior executives.