HSBC MF had changed the fundamental attributes of the scheme without providing investors an exit option
Mumbai: Securities and Appellate Tribunal yesterday passed an order directing HSBC MF to comply with 18 (15) A of SEBI Regulation for changing the fundamental attributes of the scheme without providing investors an exit option in advance which led to losses for investors. The two investors had filed a complaint with the fund house and SEBI but SEBI let off HSBC with a warning to comply with the rules without providing the complainants with an exit option. Subsequently, the complainants approached the tribunal.
Subramaniam R Venkat and his wife Anuradha Venkatasubramaniam filed a case against SEBI and HSBC MF after they suffered losses as they were not kept informed of the changes in the fundamental attributes of the scheme.
The husband and wife had invested a sum of Rs 2.52 crore in HSBC’s Gilt Fund short term plan. HSBC MF wound up the long term option in January 2009 as it could not gather a minimum of 20 investors. So the short term fund which was for a period of five years to seven years was changed into an investment horizon not exceeding 15 years. The investors have alleged that HSBC MF had violated SEBI rule which requires them to inform each investor prior to making any changes in the scheme with an exit option.
Mr Justice N K Sodhi yesterday passed an order asking HSBC MF to compensate investors with an option to exit at the then prevailing NAV of January 05, 2009.
SAT also pulled up SEBI whole time member in this matter. “We are really amazed that the whole time director after recording a finding that respondents (HSBC) had changed the scheme which affected the interests of the unit holders without complying with the regulation 18 (15) A of the regulations and failed to issue directions to the respondents for complying with the provision. We are satisfied that the whole time director grossly erred in not issuing appropriate directions in this regard,” stated the order.
