May 16, 2016

Mutual Funds: A Mockery of Disclosure

Maybe it had something to do with being ‘Friday the 13th’.  Last Friday, for reasons that I cannot figure out, I was drawn into three separate, but equally vigorous conversations about how fund houses have chosen to interpret and act upon SEBI’s recent directive to disclose executive remuneration.  Of the three people who reached out to me, one is a respected investment advisor, another is a former client who occasionally consults with me, and the third is a friend who happens to be a DIY investor. 

All three of them were of the view that if a fund house had any reservations about making the said disclosure, it should have challenged SEBI.  Since no fund house had done so, there was no reason for any fund house to not disclose the information as directed.  Further, each of them felt that by adopting devious ways to mask the disclosure, most fund houses were making a mockery of it.  To paraphrase my former client: “A law is followed either in letter, or in spirit, ideally in both.  But in this instance, nearly the entire fund industry has chosen to ignore the spirit and to come up with their own perverse, pathetic and distorted interpretations of the letter.” 

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