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SEBI has asked fund houses through AMFI to seek confirmation from unitholders where they find MFDs’ name as the second or the third holder in joint MF folios.
This has come after SEBI reportedly found a few instances where MFDs have put their name as the second and third holder in the joint MF folios without the knowledge or consent of investors.
In fact, AMFI has issued a declaration form seeking confirmation from unit holders of the first holder or other joint holders to see if the name of the distributor has been added with their consent or knowledge.
A senior fund official told Cafemutual that this exercise is currently happening in a handful of folios; however, SEBI has asked RTAs to find out all folios having MFDs as the second and third holder in joint MF folios and send the list to AMCs to verify its veracity and obtain consent from investors.
Currently, a few fund houses have been reaching out to MFDs clients to verify if they are aware of the distributor as the second and third holder in their joint MF folio.
In one such communication, the fund house wrote to investors of such folios urging them to send declaration within 15 days. However, the fund house said if they do not receive any communication from such investors, the fund house will remove the name of the MFD from the joint MF holding.
A few fund houses said that removal of MFDs’ name from joint MF folios on non-receipt of declaration will be unfair if the case is genuine. These fund houses say that they will call such investors and urge them to send the declaration at the earliest.
