By now everybody knows that JP Morgan bought a lemon from Axis Bank. Name of the lemon was Amtek Auto. Well it does not matter.
Name of the Fund: JP Morgan India Treasury Fund.
What should a Treasury fund contain: Government bonds. (look up Wikipedia please).
Who is to ensure that a Treasury fund should have only sarkari bonds? At the top the Trustees should ensure that a system is put in place so that a liquid fund does not hold equities, a treasury fund does not hold junk bonds, etc. It is a simple process to be installed.
The Custodian saw what was happening, the broker did the documentation for the bonds (obviously), so both these people knew.
The Investment committee knew what was happening (if they did not they need to be sacked now).
The CIO, MD, should have been part of the committee. So the directors knew (the MD is acting on behalf of the board)
The Vigilance should have seen what happened….
Now the funny part.
Who will be blamed for the losses of the retail investor?
Yes you got it right: The IFA.
The IFA should have known that a Treasury fund can have corporate bonds bought in the secondary market (come on it happens regularly), The IFA had no business recommending a Treasury fund to a corporate, retired person, student, …or anybody. Did the IFA not know the risk of a treasury fund?
So now the amount of loss that the client has made will have to be clawed back from the IFA…
ps: this is NOT A HUMOR COLUMN. This is very serious, and he will get away…
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