PIL Filed Against AMFI Ads Promoting Mutual Funds in Bombay HC

A public interest litigation has been filed in the Bombay High Court seeking directions to the Securities and Exchange Board of India for revocation of permissions granted to the Association of Mutual Funds in India for alleged 'misleading' and 'deceptive' advertisement campaigns under investor education and protection measures.

The petitioner, a chartered accountant, claimed that AMFI is “recklessly propagating that mutual funds are right without any basis or rationale.” “The ad campaigns are completely unfounded, reckless, false, baseless, and misleading with selective and distorted emphasis on positive features,” the petitioner alleged. 

The High Court of Bombay appointed an amicus curiae in this case, on 18 December, keeping the public interest involved in mind, and issued notice to SEBI and AMFI.

As per the argument of the petitioner, advertisements like those emanating from AMFI are all viewing through a comparison with any of those advertised by other institutions like Reserve Bank of India, National Stock Exchange, and even SEBI itself not soliciting any business, carrying no commercial motive, indeed ‘truly’ meant to serve the public good, unlike AMFI ads, which have a commercial motive.

“There is no element, whatsoever, of investor education or awareness in the ad campaigns propagated by Amfi. These ad campaigns do not highlight or mention about the features and characteristics of mutual funds, its limitations/constraints, etc., but only emphatically endorse and opine that mutual funds are right (sahi hai) without any basis or merits, with a small sidelined disclaimer,” states the petition.

The petitioner has added that such endorsements are purely commercial in character and their main benefits accrue exclusively to the members of AMFI with scant attention being given to the aspect of protection of investors.