SEBI introduces measures to keep check on fraudulent trades in mutual funds

SEBI streamlines MFs: Capital markets regulator Securities and Exchanges Board of India (SEBI) has taken concrete steps to bring an amendment in norms governing mutual funds, whereby asset management companies (AMCs) need to put in place an "institutional mechanism" for identification and deterrence of potential market abuse, including front-running and fraudulent transactions in securities. 

As per the SEBI statement issued after the board meeting, the mechanism to be devised should consist of enhanced surveillance systems, internal control procedures, and escalation processes to identify, monitor, and address specific types of misconduct, including front running, insider trading, and misuse of sensitive information. 

An effort which aims to address the issues faced by venture capital funds (VCFs) registered under the erstwhile VCF norms with respect to their inability to fully liquidate the investments of their schemes within the tenure of the scheme, the SEBI's board has approved a proposal to provide an option to such VCFs to migrate into AIF (Alternative Investment Fund) rules and avail the facilities available for AIFs to deal with unliquidated investments. 

(With PTI inputs)