SMALL
INVESTORS’ WELFARE ASSOCIATION
Email :
SirenBajao@gmail.com
Posted on 2nd September 2020
OPEN
LETTER TO SEBI—INVESTOR PROTECTION
Dear SEBI,
Ref. Your Public Notice dated August 11, 2020 titled
“PROCESSING OF COMPLAINTS ONLY THROUGH SCORES”.
We have just celebrated
JANMASTHMI.
KRISHNA was born to kill the
demon of KANSA, and save the innocent citizens.
SEBI was born to kill the demon
of “fraudulent and unfair trade practices” and
save the investors.
In this background;
In the light of the past
humongous good work done by SEBI over the last 2 decades, for mitigating the investor’s
grievances, it is incredulous for us to see such a retrograde step being taken
in issuing this Public Notice.
How can you do this?
How can some of your officers be so self-centric?
How can you say, you will turn a blind eye and deaf ears to a
large number of complaints from investors?
How can you forget that investor
protection is the raison d'etre, the fundamental reason why SEBI was formed?
How can you forget your own
slogan “ HAR INVESOR KI TAQAT?”
How can you scorn off the
investor and claim you are empowering him.?
How can you forget that to reach
out to the large number of investors you had to resort to Hindi or other
regional languages?
How can you allow some
self-serving bureaucrat in SEBI with a typical SARKARI BABU mindset
(fortunately, even this is changing) to draft such a scheme and officially
announce that they will not work under some pretext?
SAT has also often found you
lacking in investors protection.
In a country where letter writers
are sitting in front of post offices to help people write personal letters at a
fee, you expect an average Joe to be literate in English and to be tech savvy
enough to be able to use the SCORES platform as the only mechanism to raise his
voice and complain against wrongdoings by listed companies and
intermediaries!!!
Talk to any investor on the
street, and he will give you ten stories of how he was fooled, tricked or
cheated. Or how, some of the companies play a nasty game against the interest
of the public/small shareholders. If they are asked whether they have
complained, the most likely reply will be “KUCH NAHI HOTA HAI complaint SE
(Complaints are useless)”. All complaints are waste of efforts. Even the author
was quoted in the Economic Times on 09.09.15 - “there’s no real recourse for small investors.”
No doubt, to say nothing happens, is not
correct. But that is the public perception. As it is said “Justice should not only be done, but it should also appear to have
been done”
SEBI has done a great work for
investor protection, but I am aghast at the SEBI Notification dated 11 August
2020. This essentially says, if you have a complaint, fill up the e-form and
let the automated system work. If you are not a computer literate, or do not
know English (which is not the mother tongue for most Indians) you practically
cannot approach SEBI. SEBI is officially announcing that it would turn deaf ears to all the investor’s cries not channelized
through SCORES.
It does not matter that, as per
SEBI’s own admission in the same Public Notice, a large number of complaints
are received outside the SCORES platform:
“SEBI has been receiving large number of
complaints on its generic e-mail ID sebi@sebi.gov.in. Investors from time to
time also send their grievances to official IDs of SEBI officers.”
My personal experience with SCORES has not been
very effective either. It takes several attempts to be able to register a
complaint successfully. It hardly ever so happens that a complaint gets
registered in the first attempt. If the company, out of fear and respect for
SEBI, resolves the complaint - the investor gets relief, otherwise the
complaint gets lost forever. For example, the author’s complaint on SCORES
about the IPO of Bharat Road was never resolved. In the IPO of Bharat Road
Network, there was heavy manipulation of subscriptions. The IPO was
undersubscribed, but the trading had been manipulated to show oversubscription.
Rs. 600 Crs. was collected from the public @ Rs. 205 per share which is now (as
of 1st September 2020)
languishing at around Rs. 35. Investors lost almost 90% of their wealth i.e.
about Rs. 500 Crs. Had SEBI acted on the author’s complaint and alerts, it
could have stopped the IPO and the consequent loss of public money could have
been avoided. My complaint to SEBI was as follows:
The recent IPO of Bharat Road Network Ltd. seems to be highly
manipulated. The issue price was very high. Subscription Figures given before
and at the time of closing were wrong.
The allotment of shares took place on 14.09.17 but BASIS OF
ALLOTMENT was not published. .Even after repeated mails, the company
refused to disclose the BASIS OF ALLOTMENT. The company secretary first wanted
to know, under which regulations I was asking for it. I wrote back that it
is the normal practice and why should the company shy away from public
scrutiny.
The reason for company's reluctance is now very clear. Against the
subscription figure of 1.62x of NII OR HNI as given to the public actually
number is just 1.08x. One single form is for 52% of the Equity.
SEBI's
emphasis on SCORES is appreciated because it allows tracking and tracing of
complaints. But this measure to preclude the common man unless given procedures
are followed by the book cannot be accepted. Think of the rural investor, the
poor person who was conned, rather than only your SOPs and rules. No, we are
not suggesting that the SCORES platform should be ignored, all we are saying is
to find out ways and means of operating it without diverting from the real
purpose, i.e. the protection of one and all, without discrimination. It is like
throwing out the baby with the bathwater.
THE
WAY FORWARD
1.
Please
withdraw this Public Notice immediately. In order to aid justice, even the Apex
Court of the country takes cognizance of a matter, even if it receives a post
card thereon with illegible handwriting.
2.
Make a full-fledged “Investors Representation
Department” (IRD). This department should take-up and follow-up all the
complaints received from the investors, received in whatever format, be it a
simple postcard. IRD should act as an advocate for the investors in dealing
with the complaints. Many investors are not able to write a proper complaint
letter.
3.
If SEBI is not willing to process the
complaints, it can outsource this to some a small BPO firm with an instruction
that all emails forwarded to them which are in nature of grievance should be
uploaded on SCORES website with whatever data available. That would be an
investor-friendly measure rather than simply dismissing the complaints due to
non-adherence with format.
4.
IRD should reach out to investors and set-up
its desks at several places, easily accessible to the investors. The officers
manning such desks should be approachable to the common man, who must not have
inhibitions based on their appearance.
5.
You must acknowledge complaints received and
inform about the action taken.
6.
You must pass an appealable order for every
complaint received. Or at least when demanded by the complainant.
7.
You must appreciate that not passing an
appealable order is obstruction of justice. Investors cannot go to SAT until
there is an appealable order.
8.
The IRD should arrange for legal help out of
the funds lying and being collected by SEBI in the name of investor protection.
9.
Another obstruction to justice for a small
investor is the cost of litigation; the hefty fee charged by lawyers. The
appellant approaching SAT must be given an option whether he wants to have a
personal hearing or not. At the option of the Appellant, the ritual of hearings
may be done away with. Unlike other civil and criminal cases, personal evidence
is not material. It is not required to observe the body language and character
to determine if the person is speaking the truth or not. For all that needs to
be said, documentary evidence is enough. The series of Appeal, Reply and
Rejoinder gives sufficient opportunity to everyone to put their points across.
Therefore, it is urged that at the option of the appellant, the personal
hearing is waived. I think this will be much in favour of the small investors
who cannot afford highly paid lawyers. SEBI and SAT will have to pass a
well-reasoned order giving their specific view on every point raised. This will
also speed up disposal of the cases before courts and help in de-clogging the
justice delivery system.
Hope that the investors’ prayers
are looked into by you, and that you would withdraw the Public Notice on SCORES
immediately. Request you to sincerely consider all the other suggestions that
have been raised above.
