Feb 27, 2008

SEBI asks mutual funds to slow risk warnings in commercials

India's mutual funds are going to have to pause for breath: the market regulator has asked them to more than double the time they spend on risk warnings to investors in their radio and television commercials. The funds, which now take two seconds in their commercials to tell customers that "Mutual Fund investments are subject to market risks, please read the offer document carefully before investing," must do so in five seconds, the regulator said. "The rapid-fire manner in which the standard warning ... is recited in the audio-visual and audio media renders it unintelligible to the viewer/listener," the Securities & Exchange Board of India said on Tuesday. India's booming economy powered a sixfold increase in the main stock index in the five years to the end of 2007, attracting hordes of retail investors to the mutual funds, prompting scores of commercials from funds to attract investments. The new rule is effective April 1.

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