Investor Issues
Callous regulator and bourses leave investors to the mercy of shady brokers

Investors duped by Unicorn securities are being made to run from pillar to post for grievance redress. While the regulator and its touted SCORES acts like a post office, stock exchanges, who boast single screen national trading are making the hapless individual run from one office to another

 

UPDATE: Updated to add response from NSE.

 

Unickon Securities Pvt Ltd (formerly known as Unicon Securities) was expelled by National Stock Exchange (NSE) on 5 September 2014 for violating various stock broker norms. At that time, NSE had asked investors to file claims against Unicon Securities within three months. However, the maximum compensation limit per investor, if found due and payable out of the Investor Protection Fund (IPF) was Rs15 lakh, the bourse clarified.
 
Kumar (name changed), a UPSC student and investor filed a complaint before SEBI to get back his shares and cash balances worth Rs1.5 lakh from Unicon Securities. It has been now more than 10 months, and Kumar has neither received his money nor any shares in his demat account. In addition, he is being made to run from one office to another for getting his money back despite clear directions from SEBI to release certain amount to investors with claims of less than Rs10 lakh, during the claim proceeding itself from the Investor Protection Fund. 
 
When Kumar first filed his complaint, SEBI, the post office, forwarded it to NSE's office in Delhi. It held one arbitration meeting at Delhi, attended by Kumar and issued a letter sanctioning a claim Rs86,696 based on their calculations. 
 
The letter also stated that in case the broker fails to give Kumar his shares within seven days, then NSE will block the amount equal to prevailing price of the shares and release the fund as per SEBI directions (CIR/MRD/ICC/30/2013 dated 26.09.2013) to the investor. 
 
According to the circular, if the member (broker) does not opt for arbitration, then the stock exchange would release the blocked amount to the investor after the seven day's timeframe. SEBI said, in case, the member opts for arbitration and the claim value admissible to the investor is not more than Rs10 lakh, the monetary relief from IPF would be given to the investor as per the case status (50% of the admissible claim value or Rs75,000, whichever is less).
 
During the arbitration meeting, representative of Unicon Securities also agreed to release Rs850, the outstanding balance in Kumar's account on submission of account closure form.
 
However, Kumar did not get any money and after several enquiries, NSE's Delhi office asked him to file fresh complaint before its Investor Grievance Redressal Committee (IGRC) at Mumbai. Kumar submitted his complaint along with all relevant documents.
 
Yet, time and again, he is asked to submit more documents without even acknowledging his submission or refunding his money from the IPF.  
 
In an email reply, an official from NSE said its Delhi office had spoken with Kumar. The official said, "(Our) Delhi team spoke to Kumar and explained to him that since there are large number of claims the Defaulters Committee is looking into it and he will get his dues soon."
 
What is more frustrating in this whole episode is Kumar is a student and preparing for UPSC examination. After his graduation, he worked for about two years and whatever he could save, invested in the stock market. Now, with his little saving remaining in abeyance due to lethargic attitude of stock exchanges and the market regulator, Kumar is finding it difficult to even support his day-to-day life, forget about buying books for his studies.
 
An investor believes in his stockbroker and it is this trust element between that allows the investment to grow, depending upon the market conditions. However, when this trust is broken, the investor goes broke and nothing really happens to the broker. With stock exchanges (the first line of regulators) and market regulator Securities and Exchange Board of India (SEBI), either turning a blind eye or showing lethargic attitude, there rarely is any action against brokers. No wonder, every day we hear stories of losses suffered by investors from markets. 
 
For resolving investor grievances, the market regulator has established the SEBI Complaints Redressal System (SCORES). SEBI and the two main stock exchanges, BSE and National Stock Exchange (NSE) continue to put out glowing reports about their successful redressal of complaints. Yet, inexplicably, investors are extremely unhappy, partly because their complaints go into a black hole and partly because the SEBI Act simply does not allow for it to provide damages or grant compensation, even by recovering the amounts from defaulting or fraudulent entities. 
 
In most of the cases, SCORES merely acts like a post office and forwards investor complaints to the stock exchanges or the depositories. However, since there is no check on the outcome, investors, like Kumar, continue to suffer. 
 
After NSE expelled Unicon Securities, on 10 December, SEBI barred the brokerage and its directors, Gajendra Nagpal and Ram Mohan Gupta and its two key management personnel, Pawan Dhanuka and Pritam Pandya from markets for violating various stockbroker norms.  
 
In April 2014, Moneylife raised the issue of the broker's non-functioning trading platform. The broker was neither honouring payout requests from its investor customers not its customer services and offices were reachable. (Read: Has Unicon Securities shut shop?)
 
As of 31 March 2014, there are 315 complaints registered by customers against Unicon Securities during FY2013-2014 on NSE, out of which 52% were not resolved.
 
The investors, who have their trading account with Unicon Securities were worried about their investments as they are not able to trade and withdraw money from their account. The non-existence of its customer services and offices too raised a question in April 2014 about what went wrong with Unicon Securities and when will the regulators step in? NSE took action against the brokerage only in September while SEBI barred Unicon Securities only in December 2014. However, this has not helped investors in any manner. There are several investors who had trading account with Unicon Securities and still waiting for their money and demat shares.
 
Hope the regulators wake up to the cries of helpless investors, especially those, whose trust is breached by the broker, and give timely justice.
 

User

COMMENTS

Mike Smith

2 years ago

No wonder Indians are mostly investing in Precious Metals, Real Estate and FDs.

sanjay

2 years ago

it is serious

sanjay

2 years ago

regultors should look at it seriously

Kiran Aggarwal

2 years ago

This is a shocking story .
Esp. the case of UPSC student
the boy just wants to trade in market
and he landed in the soup .

---------------------
GOOD RESEARCHED STORY ML
KEEP IT UP
MANY PITFALLS IN PROCEDURE TO SUCCESSFUL INVESTING .

REPLY

sanjay

In Reply to Kiran Aggarwal 2 years ago

it is shocking but sadly a true state of the mrket

sanjay

2 years ago

this is a big organized sham on investors

manoharlalsharma

2 years ago

why only UNICORN ? there r plenty like ORKAY,UNIQ OILS and so a big data available with exchange.so please take whole episode.

Radhakrishnan Subbiah

2 years ago

My conviction ( repeated in no of earlier such comments) is confirmed for the 100th time in succession.
We have one huge corrupt machinery ( starting from the businesses, banks,exchanges to the government & its various agencies) whose fodder is the common man . It thrives on grinding & squeezing out the life-blood of the common man.The only way a common man can escape from this corrupt machinery is to stay away , as far as possible, from investing in any of these despicable entities.

Vaibhav Dhoka

2 years ago

Callous regulator or I will say callous government machinery is legacy we inherited from Britishers.The two worst things we kept with us is JUDICIAL system and suppressing the public VOICE. We never bothered to inherited discipline punctuality and HARD work from Britishers.With this inheritance came corruption and judicial delay.
Corruption and NO ACCOUNTIBILITY plays the biggest role in this CALLOUS attitude in government machinery. As there is NO ACCOUNTIBILITY and NO PUNITIVE ACTION the corruption goes unabated. That doesn’t mean that whole system is rot. There are officers and judges with exemplary track record who works fearlessly whose count is superseded by corrupts. Revenue tops the graph followed by police and the regulator SEBI.
As mentioned SEBI act as postmaster for investors’ complaint. Then to shrug its responsibility it INVENTED the system of SCORES that is you get automated reply to investors. When SEBI itself is not taking up INVESTORS complaint then why it is flooded with highly paid officers in MIRDS department and others? Will SEBI chief reply? The below complaint will expose SEBI.
Kotak Sec.Ltd appointed franchisee Mateo Consultant Ltd. In Pune.A franchise works under the registration of its PRINCIPAL i.e all board and papers are in name of PRINCIPAL.SLBS was then in 2004 was permitted for three entities and Kotak was one of them. With help of franchisee Kotak got 1000 shares of Ranbaxy (Now 2000) in SLBS agreement. After four months franchisee vanishes. When complained to SEBI the act of postmaster started and complaint referred to NSE,BSE who are in hands of brokers. In mean time one Dheeraj Balkrishnan came to Pune to offered 50% shares back, which I refused to accept. Then in 2005 Ms Priya Subbarman Vive Pres. appeared on behalf of Kotak at NSE and again offered 50% shares back. Which was not accepted?
When complaint was with EOW of Pune police they said approach SEBI at the instance of Kotak official. Even though there was fraud which was criminal action police failed to act which shows to what extent we have stooped due to corruption. All the system of ARBITRATION and extra judicial process is SHAM. The ARBITRATORS are in hand s of brokers. Very rarely in petty case they decide in favor of INVESTOR.
I have heap of correspondence with SEBI,NSE,BSE and Pune Police. This substantiates my allegation leveled in beginning. Why no answer is given to complainant the reason for NO ACTION by concerned department if this system of reply is enacted it will bring TANSPARENCY AND WILL REDUCE CORRUPTION to great extent. Will SEBI,NSE,BSE and Pune Police dare to reply my above allegation.

REPLY

Sweena Jain

In Reply to Vaibhav Dhoka 2 years ago

Why did Kotak officials offered only 50%shares back when it took 1000 shares before NSE authority which shows that all are guilty and are embedded in web corruption.This shows that all these authorities are corrupt and there is no Messiah for Investor.No action speaks lot in favor of investor.

RAMESH VASWANI

2 years ago

Sir,

If the system of redressing grievances of investor is not being served properly and effectively, why not abolish all these post office like institutions. I feel these institutions have been created only to milk the cow and put some one in good humour ( not an expert or effective administrator).
Better avoid middle post offices and act effectively; if not able to
manage, then give authority to some one to act (not simple post office).

R Balakrishnan

2 years ago

SEBI exists merely to serve interests of large and corrupt corporates.Each SEBI official should also be investigated by EOW and CBI along with IT or Enforcement

Delhi rape victim files lawsuit against Uber in US court

The woman is seeking an unspecified amount of damages that should be determined at a jury trial and compensation for the physical and monetary harm

 

The 25-year-old Indian woman, raped by an Uber driver in New Delhi last month, has filed a lawsuit against the taxi service company in a US court. She argued that Uber does not adequately screen its drivers and its negligence and fraud lead to her being sexually assaulted and humiliated.
 
The woman has not been named in the 36-page lawsuit filed in the California federal court against the San Francisco-based firm and has been identified only as ‘Jane Doe’.
 
She is seeking an unspecified amount of damages that should be determined at a jury trial and compensation for the “physical and monetary” harm and for harm to her professional and personal reputation the assault caused her.
 
She is also seeking a permanent injunction directing that Uber take all affirmative steps necessary to remedy the effects of the unlawful conduct alleged in the lawsuit and to “prevent repeated occurrences in the future.”
 
Following the filing of the lawsuit, the victim’s lawyer, prominent New York Attorney Douglas Wigdor said Uber’s focus on its “bottom line over the safety of its passengers has resulted in what can only be described as modern day electronic hitchhiking.”
 
”...We intend to hold Uber responsible for the significant physical and emotional harm it has caused to our client, while simultaneously seeking a court order mandating that Uber initiate certain safety precautions that they appear unwilling to do voluntarily,” he said.
 
Wigdor hoped that the lawsuit would bring about positive change that will ultimately protect people worldwide who are unaware of the “serious risks of entering into an Uber car.”
 
Jeanne Christensen, a partner at the Wigdor law firm, said Uber executives’ decisions to cut costs at the expense of customer safety forced the young woman to “pay the ultimate cost.”
 
“Her brutal rape by an Uber driver who was a known repeat sexual predator was a result of a global Uber policy that has far-reaching consequences. We intend to hold Uber accountable for violence that could easily have been avoided had even a minimal background check been conducted,” Christensen said.
 
Wigdor added that the lawsuit seeks to “slam the brakes” on Uber’s reckless worldwide expansion at the “unfortunate expense of basic customer safety.”
 
It demanded that Uber must implement necessary safety measures including opening dedicated 24/7 customer support centres in every city that it operates in, requiring all its drivers to install GPS tracking systems and tamper-proof video cameras and providing female drivers.
 
It said Uber’s “negligence, fraud and other unlawful actions” caused the woman’s sexual assault, which has “humiliated, degraded, violated and robbed” her of her dignity.
 

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Prime Minister Modi asks IT experts to innovate for ‘m-Governance’

While we look at e-Governance, let us think about ’mobile first’ and thus give importance to mobile governance, the prime minister said

 

Prime Minister Narendra Modi on Friday asked the Indian experts in information technology (IT) to explore ways to provide as many services as possible through mobile phones to boost M-Governance (Mobile-Governance).
 
The Prime Minister noted that e-Governance was an essential part of his ambitious ‘Digital India’ project and underlined that the scale and speed of India’s development journey requires maximum and smart utilisation of latest technology.
 
“I urge you to explore ways to provide as many services as possible through mobiles. Let us bring the world into our mobile phones,” Modi said at the 18th national conference on e-Governance through Twitter, the first time the Prime Minister has used the micro-blogging site to address a large gathering.
 
His series of tweets were shown live on a big screen at the Mahatma Mandir at Gandhinagar. Participants from varied fields, including top IT industry representatives, were present at the conference.
 
    While we look at e-Governance, let us think about ‘mobile first’ and thus give importance to m-Governance (mobile governance).
    — Narendra Modi (@narendramodi) January 30, 2015
 
On his ‘Digital India’ project, Modi said e-Governance was an essential part of it.
 
    e-Governance is an essential part of our dream of Digital India. The more technology we infuse in Governance, the better it is for India.
    — Narendra Modi (@narendramodi) January 30, 2015
 
“The Centre is committed to realising the dream of Digital India, with a vision to make India a digitally empowered society and knowledge economy,” he tweeted.
 
“I am also certain that technology and e-Governance will make processes simpler and remove several obstacles slowing the pace of work and progress,” he said.
 
“We are actively working to create a robust digital infrastructure that would serve the interests of our citizens and transform their lives,” he said.
 
“e-Governance is an essential part of our dream of Digital India. The more technology we infuse in governance, the better it is for India,” Modi said in another tweet.
 
“Scale & speed at which we have to take India’s development journey requires maximum & smart utilisation of latest technology,” he said stressing on the importance of use of technology in skilling Indian youths.
 

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