Scams In Mutual Investment At Corporate Society: A Legal Regulatory Perspective
- IJLLR Journal
- 2 days ago
- 2 min read
Kiruthik Raj M, SRM School of Law, SRMIST, Chennai
Sailesh Kumar N, SRM School of Law, SRMIST, Chennai
ABSTRACT
Mutual funds are regulated by Securities and Exchange Board of India (SEBI). SEBI is the primary regulatory body to control and govern Securities market. Several, scams in mutual fund involves deceitful, misleading information & fraudulent activities by the insiders, agents, financial advisors and managers of mutual fund. Some of the major scams that have happened are Ponzi and pyramid scheme, fake platforms and mutual fund apps, unscrupulous advisors, risk misrepresentation, unauthorized transaction and scams by social media influencers. The impact of such financial scams includes destroying the reputation of the involved parties and potentially undermining the stability of the market as a result of the degraded confidence and participation of investors. On a broader socio-economic level, this could lead to misallocation of resources, financial instability and also can involve in reducing of economic productivity. Regulatory efforts have increased from agencies like SEBI in the form of improved disclosure norms, increased penalties and compliance efforts in order to protect investors and restore trust in the financial system. The need for impactful corporate governance, proactive regulatory frameworks and increased investor consideration in terms of scams in mutual funds and protecting the interests of the corporate society have been highlighted in the study. The mutual fund industry is governed by integrated regulatory framework provided by the SEBI, which plays a significant importance on investor welfare, market transparency and overall market quality. Mutual funds are also required to have fraud detection mechanisms in place for frauds, such as front-running, insider trading and unauthorized transactions. Furthermore, SEBI has strong oversight of asset management companies (AMCs) and requires them to have surveillance and compliance mechanisms in place.
Keywords: Mutual fund, scams, corporate society, SEBI (Securities Exchange Board of India, investors)
