The Supreme Court on Friday dismissed a petition that challenged the authority of the Securities and Exchange Board of India (Sebi) to regulate entry loads in mutual fund (MF) schemes.
The court rejected an appeal in a case where Chanchal Jain, the petitioner, wanted a Sebi circular of 30 July 2009, which prevented entry loads in MF schemes, to be declared ultra vires, or beyond the powers of the capital market regulator.
Chief Justice S.H. Kapadia’s bench did not entertain the appeal on the grounds that Sebi had issued the notification to protect investors.
The apex court affirmed the ruling of the Delhi high court, which in July had reasoned: “To protect the interest of investors in securities, the board is empowered to regulate the securities market and for which it is empowered to take such measures as it deems fit. We would simply highlight that the circular does not prohibit commission to be charged by distributors, but prohibits an entry load in all mutual fund schemes.”
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