SECP Warns AMCs Against Mis-Selling of Units of Collective Investment Schemes

The Securities and Exchange Commission of Pakistan (SECP) has directed asset management companies (AMCs) to strictly comply with the conditions during the sale of units of Collective Investment Schemes (CISs) to the investors.

According to the guidelines issued by the SECP here on Tuesday, an AMC shall not be involved, directly or indirectly, in the mis-selling of units of CIS. In this regard, an AMC shall not sell units of a CIS under its management (directly or indirectly) by making a false or misleading statement, concealing or omitting material facts of the CIS, and concealing the associated risk factors of the CIS.

Moreover, an AMC shall take reasonable care to ensure the suitability of a CIS to an investor before the sale of units of the CIS. An AMC shall ensure that any performance reporting/ presentation of a CIS is accompanied by all explanations, qualifications, limitations, and other statements that are necessary to prevent such information from misleading investors.

An AMC shall ensure that promotional materials do not contain untrue statements or omit to state facts that are necessary in order to prevent the statements from being misleading, false, or deceptive.

The AMCs shall also comply with the conditions in respect of open-end funds being managed by them. In case of receipt of complete application along with the online payment/ payment instrument within cutoff timings, for investment in open-end funds following historical pricing mechanism.

AMCs shall ensure that each payment instrument is deposited expeditiously by utilizing the appropriate banking facility, SECP added.

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