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SEO Considers Disciplinary Actions against Offending Funds

The Securities and Exchange Organization has considered disciplinary actions against mutual funds that happen to violate the interest rate regulations.

The Securities and Exchange Organization has considered disciplinary actions against mutual funds that happen to violate the interest rate regulations.

Banks, credit institutions and investment funds are not allowed to offer more than 15% of interest to their depositors.

The Central Bank of Iran and the SEO have agreed to cooperate closely to take disciplinary actions against offending funds listed on the stock market, said SEO Chief Dr. Shapour Mohammadi on Sunday.

He noted that all mutual funds looking for extending their license or increasing their capital need to imply with monetary regulations or face consequences.

Mutual funds as well as many of the credit institutions and banks have been violating the 15% cap on interest rate in a struggle to keep themselves afloat under liquidity pressures. Officials worry that huge amounts of liquidity may be blocked in banks while businesses are desperate for cash flow.

“We keep tight supervision over mutual funds that offer higher interest rates than legally allowed,” Dr. Mohammadi noted.

“The funds which violate the monetary regulator’s interest rate policy will fail to extend their operation license,” he stressed.

In a recent statement, the SEO’s supervision department announced that neither banks nor credit institutions are allowed any longer to issue a license for mutual funds to open investment units. Also banks are not allowed to get involved in the management process of the registration affairs in mutual funds.