Capital markets regulator Sebi on Saturday proposed that asset management companies (AMCs) set up surveillance and internal control systems for the deterrence of possible market abuse and fraudulent transactions.
It further suggested that senior management of AMCs should be responsible to ensure that an institutional mechanism is put in place to detect and report possible misconduct by its employees, dealers, stock brokers or any other connected entities.
Further, AMCs should have appropriate escalation and reporting mechanism for possible market abuse and fraudulent transactions in securities related to the AMCs’ transactions, Sebi said in its consultation paper.
This comes in the wake of Sebi passing orders in two instances of front-running pertaining to Axis AMC and Life Insurance Corporation of India (LIC).
In the Axis AMC case, broker- dealers, certain employees and connected entities were found to have front-run the trades of the AMC and in the case of LIC, an employee of a .
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