I must thank a reader for giving me the phrase in the title. Commenting on my BS blog on ‘Sebi and the hypocrisy of geographical spread,’ bit.ly/ReRXr6 Ram said, “…I would imagine it needs to act as an investment regulator (emphasis mine). …Sebi should act as a crusader for this, rather than focusing of trivials on the cost, it should allow level playing field and work in collaboration with insurance regulators, etc.”
I cannot agree more with Ram's point that Sebi should focus on broader and more serious issues. It has taken a little step by deciding to enact the Investment Advisors Regulations. But, proof of enactment is in its enforcement.
Also, while there is scope for improvement in the area of stock markets, Sebi should try and see the larger picture and take control of it by defining its jurisdiction and powers little more creatively.
Though it has attempted to do so in sporadic instances, the failure to push the envelope relentlessly has cost the organisation and the investing public dearly. It is apparent that even within Sebi, there are elements which are happy to pass the buck even though there is clear evidence of compromise of investor interests. This bureaucratic ‘not my job’ syndrome has to be overcome.
One familiar and frustratingly large grey area is the turf that is co-regulated by Sebi and the Ministry of Corporate Affairs. Though both have publicly acknowledged that they play a complementary role in regulating companies, a few disturbing instances have come to the fore in the recent Right to Information (RTI) appeals rejected by a whole time member (bit.ly/OhH9dm).
However, the order rejected the appeal of applicants who claimed to “have invested large funds with the company and we are also representing one of the largest investor groups of the shares of the company” .
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The appellants wanted to know what action was taken regarding the charges levelled against the Andhra-based drug company which include “1. The company never sends the AGM or EGM notices to the shareholders. 2. All the AGMs of the company are held with proxies from the villagers and this has been going on for more than a decade.3 During the AGM held in December 2011, the company never published the venue for the AGM in the company's website or in the BSE website and thus no shareholder had any knowledge about the place of AGM.Thus most of the shareholders could not reach the AGM.”
Am I reading these from a Sebi order or some Telugu movie script? What followed made the above paras look benign. “As the nature of complaints referred therein were outside Sebi's purview, the same were being forwarded by Sebi to the concerned authority with intimation to the complainant and after the implementation of SCORES w.e.f. June 2011, such complaints were being sent back to the complainant with an advice to take up the matter with the MCA/concerned authority.”
In short, with the implementation of SCORES, Sebi won't even forward complaints to the concerned authority. Interesting regulator, but Investment Regulator? Not yet.