UBL FUND MANAGEMENT LIMITED vs Ms — 2025 CLD 393 SECURITIES-AND-EXCHANGE-COMMISSION-OF-PAKISTAN

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UBL FUND MANAGEMENT LIMITED VS Ms. MOMY KAMAL Reglns. 66a(c)(i), 66a(c)(iv), 66a(d) & 66a(f)---Investing in Equity/Mutual Funds---Mis-selling / concealed investment risks, allegation of---Risk categorization of investor---appellant (Fund Management Company) was penalized by the Securities and Exchange Commission of Pakistan (Commission) on complaint of lady investor (a housewife who had invested an inherited amount) who redeemed the availed plan owing to loss of principal investment allegedly due to contraventions on the part of the appellant---Validity---Purpose of the need assessment section of the account Opening Form (aOF) was to determine the suitability of a person for certain investments, however, the appellant failed to proceed in the required manner and in result thereof, a major part of investment of respondent (complainant) was allocated to the high-risk equity fund (average investment in equity funds during the plan duration remained 66.11%)---Respondent (complainant) was a housewife and the invested her inherited amount, therefore, for all practical purposes her risk appetite tolerance level may not be considered as 'moderate', rather the risk tolerance level should have been recorded as 'low'---Notwithstanding, as per the risk assessment section of the aOF, respondent (complainant), who had been assigned a moderate risk tolerance level, should have been admitted to a capital protection fund and other balanced funds, however, her major investment was made in an equity fund---Importantly, in the aOF, the equity investment solution has been provided for a high tolerance level client---Instead of offering a capital protection hand, she had been admitted to an equity fund---Respondent / complainant is a housewife, therefore, she cannot be considered well-informed and vigilant Investor who can understand the risk-bearing factors of equity funds ; thus, the appellant had not acted in her best interest and failed to ensure reasonable care regarding the suitability of the investment product offered to her---However, appellant apprised the appellate Bench that without admitting the guilt and on compassionate grounds, a compromised deed had been executed between the parties with the amount of loss suffered by respondent having been paid to her---appellate Bench, while appreciating said compassionate act of compensation, converted the penalty into a warning---appeal, was dispose of accordingly.

UBL FUND MANAGEMENT LIMITED vs Ms — 2025 CLD 393 SECURITIES-AND-EXCHANGE-COMMISSION-OF-PAKISTAN

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