False market news: SEBI to take compliance officers to task

The move comes after growing concerns over some employees indulging in activities like fraud against clients, front-running, circular trading and manipulating share prices through rumour-mongering

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) today sought to give more teeth to its new guidelines on dissemination of news by market intermediaries by holding compliance officers of such firms liable for breach of duty in case of a failure to check contents forwarded by employees, reports PTI.

"Employees should be directed that any market-related news received by them either in their official mail/personal mail/blog or in any other manner should be forwarded only after the same has been seen and approved by the concerned intermediary's compliance officer... The compliance officer shall also be held liable for breach of duty in this regard," SEBI said in an addendum.

This comes a day after SEBI announced a new set of guidelines, including restricting access to Internet forums for employees, for market intermediaries to ensure that unsubstantiated news is not circulated.

Failure by any employee to seek approval from the compliance officers before forwarding such material had already been made liable for action.

The move came after growing concerns over some employees indulging in activities like fraud against clients, front-running, circular trading and manipulating share prices through rumour-mongering.

It was intended to prevent dissemination of unauthenticated news which could distort the normal functioning and prices of stocks.

SEBI had said that such news related to various scrips are circulated in blogs, chat forums and e-mails by employees of broking houses and other intermediaries in violation of rules.

"SEBI-registered market intermediaries are directed that ... proper internal code of conduct and controls should be put in place," the circular issued yesterday had said.

It had further said that staff of broking houses and other intermediaries should be discouraged from circulating information obtained from clients or others without proper verification.

"... In various instances, it has been observed that the intermediaries do not have proper internal controls and do not ensure that proper checks and balances are in place to govern the conduct of their employees," SEBI said, adding that such speculative news and "rumours" can affect the functioning of the markets and distort prices of bourses.

The watchdog had further said that access to blogs, chat forums and other sites should either be restricted under supervision or access should not be allowed.

A SEBI-appointed committee comprising representatives from various market intermediaries in its representations had earlier suggested the need for such a Code of Conduct.


Govt worried about fuel supplies from volatile Middle East: FM

Finance minister Pranab Mukherjee's statement comes at a time when the political turmoil in places like Libya and Bahrain has taken global crude prices to over $100 dollar per barrel. India imports nearly two-third of its oil requirements from the region, he added

New Delhi: Finance minister Pranab Mukherjee today said the country was concerned over the ongoing turmoil in Middle East and North Africa as it imported two-third of its oil imports from the region, reports PTI.

"If you look at our oil requirement...out of 100 million tonnes imported last year, 67 million tonne or two-thirds came from Middle East alone," he said in the Rajya Sabha while replying to a debate on the Finance Bill.

"If the situation remains unstable there, it is quite natural for anyone to express concern and to hope and to try, if possible, to restore normalcy, peace and stability in the region because our vital interests are linked to that."

He also pointed out that there were six million Non-Resident Indians (NRIs) in the Middle East.

Mr Mukherjee's statement comes at a time when the political turmoil in places like Libya and Bahrain has taken global crude prices to over $100 dollar per barrel.

Crude prices had touched a 30-month high of $120 per barrel last month following unrest in Egypt and Tunisia.

In his reply, the finance minister also said that increase in global commodity prices was a reality to be lived with.

"...Why did I refer to the crisis in Middle East or Japan...? Not to find a cover to have some excuse that the prices will go up. It is not that. Today my primary concern is about the availability... it is not an excuse," he said.

Experts are apprehensive about disruption of supplies from Libya, a major oil exporter and OPEC member, on account of fighting between government forces and rebels.

India imports almost two-thirds of it oil requirement and state-run firms have been suffering losses on account of the huge subsidy bill.

While the government deregulated petrol prices last year, diesel continues to be on the regulated list. If the current spurt in oil prices continues, the government may be either forced to pass on the burden to consumers or risk inflating its deficit.

According to experts, the government is expected to take a decision on diesel price deregulation after assembly elections in four states and one Union Territory, scheduled for April-May, are over.


RBI panel puts final report on bank customer service improvements in cold storage

The committee, chaired by M Damodaran, has prepared the report. But members of the panel (a few top banking luminaries are on its board) are not aware of when the report will be finalised and whether there are any changes. Mr Damodaran, however, says that he is in the process of redrafting the report and that “it should be out in the next ten days”

A committee set up by the Reserve Bank of India (RBI) to look into the issues of customer services, has prepared its report and has been waiting for the final take from Mr M Damodaran, head of the committee.

Despite the report being ready, it has not been finalised for reasons best know to Mr Damodaran, say informed sources.

In fact, because of the long silence, the committee members are not even aware if there will be further meetings and modifications to their recommendations.

According to sources, the report has apparently been submitted in late January to Mr Damodaran and the committee is waiting for his final go-head.

"After submitting the report to Mr Damodaran in January, we are also waiting for the report to be released and we are not aware when it will be released," one of the members of the committee told Moneylife.

Ashok Rawat, one of the members of the committee and Hon Secretary of the All-India Bank Depositors' Association (Mumbai) had earlier confirmed to Moneylife that the report was supposed to be released in mid-February.

"The Damodaran Committee will table the report on customer services by the 15th of this month. If the logistics are properly taken care of, we may even see the report being released earlier-before the 10th of this month," Ashok Rawat had told Moneylife on 7th February. (See: Damodaran Committee may release final report on customer service in banks by mid-February )

However, a senior RBI official informed that "the report is being finalised."

"The committee is preparing the report and it will be finalised within the next one month," P J Mathkar, assistant general manager, customer service department (from RBI's central office, Mumbai), told Moneylife.

Kaza Sudhakar, chief general manager, customer service department, RBI and member-secretary of the committee refused to offer any comments, and asked Moneylife to speak to the head of the committee (Mr Damodaran).

In response to our query, Mr Damodaran said "All we have just now is a draft report, or working paper. This is the first important report on the customer services after the MN Goiporia report. Our committee met a lot of stakeholders and we want to make sure that their views are properly represented in the report. I am in the process of redrafting it and the report should be out in the next ten days."

According to our sources, banks do not want the report to be released as it has recommended many pro-consumer suggestions, which will increase pressure on banks for better customer services.

The committee is expected to undertake a strict review of the existing system of the Banking Ombudsman Scheme and attending to customer service in banks, including the approach, attitude and fair treatment to customers from retail, small and pensioners segments. The committee was also asked to evaluate the existing system of grievance redressal mechanism prevalent in banks, its structure and efficacy and recommend measures for expeditious resolution of complaints.

The committee may also lay down a suitable timeframe for disposal of complaints including the last escalation point within that timeframe.

M Rajyalakshmi Rao, former member, National Consumer Disputes Redressal Commission, New Delhi; MV Nair, chairman, Indian Banks Association and CMD, Union Bank of India, Mumbai; BM Mittal, CEO, BCSBI, Mumbai; MS Sundara Rajan, former CMD, Indian Bank, Chennai and S Gopalalakrishnan, former Banking Ombudsman, Chennai, are the members of the committee.




6 years ago

The committee is headed by M Damodaran who is advisor to several foreign banks. If he is sitting on the report ... as I believe he is, then maybe it is because it contains pro-customer recommendations.
As SEBI chairman, Damodaran was hardly pro-customer. And now maybe ING Vysya where he is a consultant does not like what is recommended!

When it comes to consumers, nobody is interested!!



6 years ago

It's true to form that the banking luminaries do not know when the report will be finalised. But I know - never. Why finalise it when there will be updates and modifications involving regular sittings of the committee with attendant perks!!!

Narendra Doshi

6 years ago

It is surprising that there was NO private/bank representative in the committee. Do you know why?
Banks are more commercialized & business / profit oriented NOW, as it was pointed out by Mr. Ravi Subramaniam the other day in his talk on 22/3/11 at Moneylife Foundation seminar. However, THEY MUST BE SENSITIVE & promptly FAIR ESPECIALLY TO THE NEEDS OF THE SMALL, RETAIL INVESTORS. Let them cater to ALL but social inclusiveness is desirable. When they expand to more rural interiors of India , this feature will distinguish good one from another.
Zero balance accounts, printed passbooks etc have been IMPLEMENTED by the banks , ONLY after the government's insistence. The above pending report must be thoroughly updated & implemented at the earliest even while the govt. is likely to open up for more bank licenses.
RBI has been praised worldwide for its policies (avoiding Quantum Easing andsubsequent printing of currencies). It is high time Indian Banks also gain such reputation. This is one area where you can beat China, easily.

Nagesh KiniFCA

6 years ago

Out of long experience as the statutory auditor of major PSUs and foreign Banks and later as an activist I had submitted a number of concerns to be addressed. There was no response as to how many were discussed or considered by the Damodaran Committee. Putting it in cold storage or shelving it a retrograde anti-consumer act - just because it will put the banks! Let it be put on public domain.

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