The two blasts occurred within seconds at a sidewalk along the route of the Boston Marathon, where thousands of people had lined up to cheer on the marathoners
Will SEBI-RBI Protect this Investor?
I n direct contrast to SEBI’s enthusiasm in the attempted-fraud, is the case of ML Sharma, a victim of gross mis-selling by his own bank. Mr Sharma’s manager at IndusInd Bank (Delhi) persuaded the 79-year old to invest Rs4 lakh in the product of a mutual fund house, DWS, which he was told was the Bank’s ‘Development of Wealth Scheme’—a fixed deposit. Mr Sharma was persuaded to break a fixed deposit, by waiving charges and transfer the money to this scheme. The manager went to his house to complete the formalities and helpfully offered to fill in the form details himself. Mr Sharma was delighted at the ‘service’ and fell for it. After all, most people trust their bankers implicitly. As our columnist Vivek Sharma has written, the DWS Hybrid Fixed Term Fund Series 10 Growth is a fixed term debt plan with no redemption for five years and only a market exit where liquidity is poor to non-existent.
Mr Sharma realised that he was cheated when he received his first statement. He complained to the Bank, which ignored him. He approached the banking ombudsman, who summarily dismissed the complaint because Mr Sharma had signed the investment document.
Now, here are a few important issues. Mis-selling of insurance and mutual fund products by bank managers is rampant and the Reserve Bank of India (RBI) is fully in the know of this practice. But this is a mutual fund, so SEBI’s standards ought to apply. Back in 2008, SEBI issued rules said that stockbrokers “owe their clients a duty to provide suitable investment advice in the best interest of the clients.” Independent financial advisors also have to ensure that people get the right advice, even if they don’t get to earn commissions. Only bank relationship managers continue to indulge in brazen mis-selling and con people into buying mutual funds, unit-linked insurance products and hybrid-derivative products on the promise of higher returns. SEBI, RBI and the insurance regulator have done nothing to prevent such cheating. People, like Mr Sharma, are hapless victims. Mr Sharma says, “I am a very old man with an ailing wife” and as a retiree from the private sector he lives on interest from savings. At the age of 79, he does not need a locked-in mutual fund scheme with uncertain returns. He is completely bewildered and shattered. His only mistake was to trust his banker, only to be cheated.
This targeted mis-selling to their own customers, that too hapless senior citizens, is far worse than breaking all the rules to help launder black money through the banking system. When the ombudsman dismisses such complaints without going into details, it is signalling to the banking industry that it is alright to pick the pockets of their own customers through deceit. More damagingly, it is telling people never to trust their bankers.
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