The discussion paper mentions that there have been cases where some people had prior knowledge of negative developments with a scheme and, based on such information, sold off all their holdings in that scheme. In one instance, it was by some officials of a Register & Transfer Agent of a mutual fund.
Another case was relating to officials of a fund house. In both these instances, before the unitholders of those schemes were told about the negative developments, these select groups of people sold off their holdings on the basis of what could qualify as unpublished price-sensitive information (UPSI).
“PIT Regulations are applicable to dealing in securities of listed company or proposed to be listed, when in possession of UPSI. The units of mutual funds are specifically excluded from the definition of securities under PIT Regulations,” Sebi said. “A need has, therefore, been felt to harmonise the provisions in PIT Regulations to initiate serious enforcement actions against those who misuse the sensitive non-public information pertaining to scheme of mutual fund, directly or indirectly, which they have access, by virtue of their fiduciary capacity,” Sebi said.
The regulator wants to know from the public if there should be modifications to its PIT Regulations and, if so, the reasons for the same. Suggestions and comments to the proposed changes should be sent to the regulator by July 29, it said.
Suggestions and comments on the proposed changes should be sent to the markets regulator by July 29.