Newspapers for the past few weeks have been full of news about the UTI mess. And it is little wonder given that we have had massive losses in a mammoth mutual fund, high profile arrests, finance ministers pointing fingers at each other and even a prime minister offering to resign. Exactly what happened is still somewhat unclear, but the basics are as follows: The managers of UTI appear to have had their arms twisted (by a combination of ministerial pressures and private sector inducements) into making large investments in some flimsy high-tech stocks. Along with the rest of the high-tech equity market, UTI’s fortunes have suffered in recent times – and the losses with respect to the flimsy high-tech stocks were significant. That reversal of fortunes resulted in the once mighty UTI having to take some drastic steps such as restricting sales and repurchases of its US-64 fund. As was discovered later, however, this was not before some well-connected companies pulled out their money.
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