SEBI has asked AMCs not to spend IAP corpus on mutual fund distributors to create awareness about mutual funds among their clients.
In a letter to AMFI, SEBI has pointed out instances where AMCs have used IAP corpus to create awareness among distributors’ clients through the distributor websites or magazines. SEBI said, “It has been observed that AMCs are conducting IAPs on distributor’s platforms viz. web banner, distributors sending e-mailers to investors, publishing education advertisement in monthly magazine of distributors etc.”
The market regulator has clarified that such IAPs create awareness only among clients of distributors or RIAs instead of direct plan investors and new investors. SEBI said, “The cost incurred on IAP initiatives through distributors or investment advisors shall not be charged to IAP corpus i.e. 1 bps earmarked by the AMC.”
A CEO requesting anonymity explained to Cafemutual that AMCs cannot fund IAP conferences of IFA associations if such events are restricted to their clients. However, if they hold such events for investors at large, AMCs can use IAP corpus to fund such events.
SEBI has also asked AMCs to use other modes to reach out to people at large.
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