Sebi to appoint forensic auditors to examine MFs, AMCs, trustees

The Securities and Exchange Board of India (Sebi) will appoint forensic auditors to examine and prepare reports on mutual funds, their asset management companies (AMCs), and trustees.

The move comes days after the capital markets regulator proposed to enhance the role and accountability of mutual fund trustees to safeguard unitholders’ interest.

In a public notice, Sebi has invited applications from eligible firms for empanelment to take up assignments related to forensic audit of mutual funds, their AMCs, and their trustee companies or board of trustees.

Requirements

The applicants must acquire, extract, and analyse digital evidence from mobile, computers, tablets, hard drives, and USB drives. Also, they need to prepare and submit a report mentioning the findings and conclusions on the analysis, Sebi said.

Spelling out the eligibility criteria, the regulator said the applicant should have at least 10 years of experience in the field of forensic audit and digital forensic and a minimum of 10 partners or directors, of which five should be actively involved in forensic audit-related work.

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Among others, the total revenue of the applicant from forensic audit assignments in the last three financial years must be at least Rs 1 crore.

Interested entities can send their applicants to Sebi by March 6, says the notice.

Sebi’s suggestions

Amid the growing scale of the mutual fund industry, the regulator, in a consultation paper on Friday, suggested that trustees of mutual funds should focus on market abuse by AMC, its employees, and mis-selling by the AMC to increase the asset base.

Also, trustees should be responsible for the fairness of fees and expenses charged by the AMC, compare its performance with peers, and ensure that the AMC’s sponsor is not getting any undue advantage.

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Also, Sebi has suggested a common platform for the dissemination of public announcements by mutual funds.

To have an independent review mechanism for the decisions of AMCs from the perspective of unitholders’ interest across all products and services, Sebi has proposed that a “Unit Holder Protection Committee (UHPC) should be constituted by board of AMC”.

(With agency inputs)