Speaking at the Leadership Dialogue for Trustees of Mutual Funds, Pandey emphasised that trustees form the first line of defence in ensuring the integrity of systems and processes within the mutual fund ecosystem.
Mumbai: Markets regulator SEBI Chairperson Tuhin Kanta Pandey has urged mutual fund trustees to build strong early warning systems capable of detecting irregularities and ensuring timely action to protect investors.
Speaking at the Leadership Dialogue for Trustees of Mutual Funds, Pandey said trustees are not ceremonial figures but fiduciary and moral guardians of the mutual fund ecosystem, responsible for maintaining integrity, transparency, and investor confidence.
👉 Trustees must not stay passive:
Pandey made it clear that trustees cannot remain silent spectators waiting for SEBI’s directions. “When needed, trustees are empowered to question, escalate, and intervene,” he said. The authority to act, he added, comes with a moral duty to do so fearlessly.
👉 Early warning systems are essential:
Trustees should develop data-driven monitoring mechanisms to detect anomalies, track exceptions, and trigger timely interventions before issues escalate.
👉 Stay updated with new investment frontiers:
Pandey urged trustees to keep pace with derivatives, ESG investing, alternative assets, tokenised assets, and AI-driven portfolio management. Continuous learning and specialized training, he said, are indispensable for effective oversight.
👉 Clear division of responsibilities:
Recent SEBI reforms have clearly defined the roles of trustees and Asset Management Company (AMC) boards.
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Trustees must conduct independent evaluation and due diligence
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AMC Boards must set up a Unit Holder Protection Committee
👉 Prevent market abuse:
Trustees should establish robust systems to prevent front-running, insider trading, and misuse of sensitive information, ensuring transparent and fair practices across fund houses.
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