Sebi clears new investment product targeting high net worth individuals

Markets regulator Sebi’s board on Monday cleared a proposal to introduce a new asset class for high-risk profile investors — High Net Worth Individuals (HNIs) — to bridge the gap between mutual funds and portfolio management services in terms of flexibility in asset construction.

In a statement issued after the board meeting, Sebi said its board had cleared a proposal to relax the regulatory framework for the passively managed mutual fund schemes to reduce compliance requirements.

Overall, the board has approved 17 proposals, including amendments to insider trading rules and relaxing eligibility criteria and compliance requirements for investment advisers and research analysts.

This is the first board meeting after the US-based short seller Hindenburg Research and the Congress party made allegations against Sebi’s Chairperson Madhbai Puri Buch.

Hindenburg accused Buch and her husband of having investments in offshore funds controlled by Vinod Adani, the brother of Adani Group Chairman Gautam Adani, which were allegedly used to round trip funds and inflate stock prices.

Also, it was alleged that Sebi had amended rules pertaining to real estate investment trusts (REITs) in a way that benefited Blackstone, where Buch’s husband was a senior advisor. Buchs and Sebi had denied the allegations.

Apart from these, the Sebi board approved a proposal to introduce provisions for ‘summary proceeding’ in the intermediaries rules to handle certain violations of securities laws by intermediaries more swiftly and efficiently.

Also, it has rationalised the disclosure requirements in the offer document and reduced the rights issue processing time to make it a preferred fundraising route.

Additionally, Sebi has cleared a proposal that would allow promoters to transfer their rights entitlement to select investors during rights issues, potentially attracting more investment into the market.