No growth but really low valuation
Stockguru, a chain-money scheme, openly flouted various SEBI rules. Moneylife pointed this out in December 2010 and again in April 2011 but SEBI, under both former chairman CB Bhave and current chairman UK Sinha, and RBI took no action. Aggrieved investors can possibly file a case of gross regulatory lapse against SEBI and RBI
Promoters of Stockguru, a chain money scheme, have been arrested by the Delhi Police's Economic Offences Wing (EOW) for duping over two lakh people from Delhi, Uttarakhand, Himachal Pradesh, Sikkim, Rajasthan, Madhya Pradesh and Maharashtra. This scheme has been going on for sometime, right under the nose of the market regulator Securities and Exchange Board of India (SEBI) but despite two reports in Moneylife highlighting this illegal scheme, the market regulator and Reserve Bank of India (RBI) chose not to act.
In December 2010, Moneylife had reported about the dubious modus operandi of Stockguru.India and advised investors to stay away from investing in the company. (This MLM openly flouts SEBI norms and offers 120% returns in a year through stock market investment!).
The article, described the modus operandi of Stockguru and precisely why it fell foul of regulations even before it duped investors and ran away. Timely action by the regulators then could have saved investors’ money. Here is what Moneylife said on 27 December 2010, when chairman CB Bhave headed SEBI.
Stockguru.India and its group companies are self-styled investment advisors, offering Rs22,000 on an investment of Rs10,000 in one year.
We said, “As if there were not enough potholes on the stock market route, here is a multi-level marketing (MLM) company that is promising 20% returns per month! The company Stockguru.India describes itself as the country’s ‘Premier Financial Consultancy’, offering trading solutions in equity, derivatives, currency futures, commodities trading, initial public offerings (IPOs), insurance (life/non-life), general insurance, mutual funds, portfolio management services, terminal handling all under one roof.”
Stockguruindia.com (the company’s portal) had only one standard line of advice in all market situations—whether it is a bull market or a bear market, range-bound market or volatile market. It said, “We advise our clients to buy shares at a low price and sell them at a higher price. Selecting the right share at the right price and entering the capital market at the right time is an art. We help all our clients to make huge profits by investing in good shares for very short/short/medium/long-term depending upon the client’s requirements. Trading/investment for minimum intraday to T+5 days may give you a handsome return of 5% to 25% on your capital investment.”
This MLM company’s investment (!) plan was simple. You pay Rs10,000 as investment and Rs1,000 as registration fees. There is no limit on the maximum amount one can invest. Stockguruindia.com offered a return of 20% per month for up to six months and the principal amount invested is returned in the next six months. It also gave post-dated cheques of the principal and a promissory note as security. In short, on an investment of Rs11,000, the company offers to pay you Rs12,000 in six months and the rest Rs10,000 over the next six months, a total of Rs22,000 or a 120% return in a year.”
Stockguru lured investors with an additional 3% per month income through a binary plan of 27 levels. Binary plans of MLM companies are the new clients you bring in, who are placed below you in rank in a right and left combination. It’s nothing but a trap. All MLM companies promise say you rewards if you complete the left leg-right leg cycle. But in practice this does not happen. A majority of those participating fall in the category where they lack a single member in one leg, or a member becomes inactive thus freezing the spread of that leg and the business.
How do MLM companies operate without a trading license from the regulators, SEBI and RBI? Why was there been no action against Stockguru.India, Stockguruindia.com and its subsidiaries by SEBI or RBI? Market regulator SEBI had, on its part, issued SEBI (Investment Advisers) Regulations, 2007 (the ‘Draft Regulations’) to regulate the advisory activities of investment advisers in India. But till date it has remained as a draft only.
According to the SEBI Act, 1992, “No stock-broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with the securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act.” In addition, the Act says, “No person shall sponsor or cause to be sponsored or carry on or caused to be carried on any venture capital funds or collective investment scheme (CIS) including mutual funds, unless he obtains a certificate of registration from the Board in accordance with the regulations.”
Stockguru.India and all its group companies openly flouted the norms and rules. It was not registered with SEBI as investment adviser and still offers to trade on behalf of its clients. According to information available over the internet, Stockguru.India and its chairman and managing director Lokeshwar Dev, will help anyone to open a demat account with Sharekhan so that they can manage the investor’s money.
We checked with Sharekhan and the brokerage said, neither Stockguru.India nor Lokeshwar Dev has any relations with or any demat account with them. In addition, neither Stockguru.India nor any of its group companies possess a certificate of registration from SEBI for CIS, but they are still collecting huge amounts from clients under the pretext of stock market investment. Are the regulators sleeping on this one?
Moneylife didn’t stop at that. We wrote again on 9 April 2011: Stockguru.India allegedly dupes 2 lakh investors of over Rs1,000 crore. By this time, Lokeshvar Dev had apparently absconded and investors were running helter-skelter for their money. SEBI was now headed by a new chairman, UK Sinha.
On 18 May 2011, Moneylife Foundation sent a representation to the prime minister of India and all the financial regulators seeking urgent action against MLMs. While urging the government to ban MLMs altogether in the aftermath of the devastating losses caused by SpeakAsia, a Singapore-registered company, which raised well over Rs1,300 crore in less than a year. We wrote: “Unlike several other countries, MLM schemes are not banned in India. Hence, schemes like City Limousine, Stockguru and GoldQuest could escape with millions. None of the financial watchdogs in India are responsible for monitoring such schemes, so there is every chance that SpeakAsia and its clones like Ram Survey and FLC Online can get away after cheating millions of their savings”. Here is a link to the memorandum: http://foundation.moneylife.in/promotion/speakasia/index.html
In the latest issue of Moneylife magazine we wrote that the government may finally be in a mood to tighten legislation against MLMs. Will they? Or is it more talk once again? After all, MLMs are funding political parties and have turned extremely powerful. Here is the crux of the problem: Moneylife has persistently written about how Ponzis, chit funds or multi-level marketing (MLM) schemes have been looting ordinary Indians through their false promises of extraordinary returns. An international consultant to MLMs writes to say, “Your country is overrun with pyramid schemes.” True, but so long as they are close to political parties, the government doesn’t seem to care. It is a well-known fact that founders of Ponzis and MLMs are the primary financiers of regional parties and derive their own financial muscle through these connections. They are now buying regional television channels and acquiring stakes in print publications to enhance their clout. The founder of one such Ponzi network, who has operations and political links with two state governments, has even bagged a nomination to the Rajya Sabha.
While the EOW has arrested the promoters of Stockguru, there is enough of documented evidence this time of gross r egulatory failure of various agencies, primarily SEBI, under two different chairmen and RBI. Will Stockguru investors file a case against these two callous regulators?
No one to date has shown that the HIV virus is the sole cause of AIDS. Apart from propaganda by drug companies, anti-viral drugs have not been shown to have made an impact on AIDS
I am in total agreement with Richard Smith, the wise former editor of the British Medical Journal, who recently wrote that free speech is a pre-requisite for any progress in connection with the AIDS controversy. Just as Milton had said in the past, the Nobel Laureate Indian poet, Rabindranath Tagore, had said in his Nobel winning poem Geetanjali that for wisdom to dawn on mankind man must live in a world where knowledge flows freely without any restrictions whatsoever. Another Nobel Laureate, Kary Mullis, the father of the PCR test, writing the foreword for the book Inventing the AIDS Virus by a noted virologist, Peter H Duesberg, his colleague at the Berkley University, has this to say about the AIDS drama. Kary should know better as the PCR test is the one that everyone uses to detect viruses.
“I like and respect Peter Duesberg. I don’t think he knows necessarily what causes AIDS; we have disagreements about that. But we’re both certain about what doesn’t cause AIDS. We have not been able to discover any good reasons why most of the people on earth believe that AIDS is a disease caused by a virus called HIV. There is simply no scientific evidence demonstrating that this is true. …we have also been not able to discover why doctors prescribe a toxic drug called Zidovudine to people who have no other complaint than the presence of anti-bodies to HIV in their blood. We wonder why humans take that drug for any reason…” Is this book a myth or are we all barking up the wrong tree? Read the following recent quotes. Pity is that Luc Montagnier has already received the Nobel!!
“Canadian filmmaker Brent Leung isn't winning any friends in the pharmaceutical industry these days. His breakthrough documentary ‘House of Numbers’ features jaw-dropping interviews with doctors, researchers and even the co-discoverer of HIV himself (Luc Montagnier), all of whom reveal startling information calling into question the ‘official’ explanation of HIV and AIDS.”
“So how on earth did it become the big boogey man virus of the world? The person who announced that HIV caused AIDS was an American, Dr Robert Gallo. He has since been accused of professional misconduct, his test has been exposed as fraudulent, and two of his laboratory executives have been convicted of criminal offenses. Tens of millions of people are tested for HIV antibodies every year and Dr Gallo, who patented his ‘test’, gets a royalty for every one.”
“Luc Montagnier, Gallo’s partner in the HIV-causes-AIDS theory, has since admitted in 1989: ‘HIV is not capable of causing the destruction of the immune system which is seen in people with AIDS’. Nearly 500 scientists across the world agree with him. So does Dr Robert E Wilner, author of the book ‘The Deadly Deception. The Proof That Sex And HIV Absolutely Do Not Cause AIDS’.”
“Dr Wilner even injected himself with the HIV virus on a television chat show in Spain to support his claims. Other doctors and authors come to the same conclusions, among them Peter Duesberg PhD and John Yiamouyiannis PhD, in their book, ‘AIDS: The Good News Is That HIV Doesn’t Cause it. The Bad News Is ‘Recreational Drugs’ And Medical Treatments like AZT Do’. That’s a long title, but it sums up the situation. People are dying of AIDS because of the treatments used to ‘treat’ AIDS!”
This brings to mind the infamous story of Beriberi. In a paper in the famous The Lancet in 1887, Kanehiro Takaki refuted the bacteria hunters’ claim that beriberi was due to a bacterium and showed that it is due to diet deficiency. He was laughed at in the beginning. Similar is the story of the SMON fiasco. SMON was a frightening disease that struck Japan in the 1950s when the polio epidemic was raging and quickly it was declared to be a viral disease by many virus hunters. After hundreds of SMON sufferers died both in Japan and other countries including India, the real cause was found out. It might be coincidence that Gajdusek published his findings that SMON (Sub-acute Myelo-optico-neuropathy) was due to slow virus in the famous journal Nature and was lauded by his fellow virologists. Another virus discovery came from the Middlesex Hospital in 1964! Finally, this syndrome was shown to be due to the side effects of a then commonly used anti-diarrhoeal drug clinoquinol! Friends, let us not be deluded easily.
“And see, no longer blinded by our eyes”—Rupert Brooke.
William Shakespeare was dead right when he wrote that the whole world is but a drama stage. Most of what we see or hear are myths. Recently, we have had the World AIDS Day. It was celebrated with much fanfare all over. Next we would think seriously of AIDS a year later. In the meantime the drama goes on backstage where drug companies and technology companies play their part in creating the claptrap that AIDS is going to annihilate mankind on this planet and the panacea for that are the drugs sold by them. Philanthropes pour their money into the drug company kitty to have a clear conscience! Drug companies have the last laugh, though.
Most of us buy that argument without going into the real truth of the matter as we do not have the wherewithal to do so and the ones that have, per force, to go deep into the real world have no inclination or time to do so. Lately medical education of students, as also the continuing education of doctors, is being funded by the drug companies. The latter do not believe in free lunch, anyway. In America this has been elegantly shown to be true to the extent that even the text books were written with the help of drug company money. Medical research relies on funding from these agencies with all government funding drying up everywhere. Naturally, the funding agencies would want to see what they want to see in medical research resulting in the medical world believing in this kind of half truths and falsehood.
We in India have been recently bombarded with the frightening news that most of the major killers like heart attacks, high blood pressure, and diabetes are going to come here in a very big way and most of us, if not all of us, are in danger unless we go with the establishment to get ourselves routinely checked up for all those maladies and take the drugs suggested by them! There is no truth in any one of the above statements. None of them is based on sound scientific validation. Epidemiology is a very imprecise science when applied to chronic diseases, although in the past it has served the limited purpose during the epidemics of contagious diseases. Most of the above propaganda of predicting the unpredictable chronic illness scenario for the future is only the hype created by the vested interests to make money. If these predictions are really true there would be no well man in the world!
AIDS is not a disease. Rather, it is a syndrome—a conglomeration of symptoms and signs—seen in certain patients who have many other things in common. Every syndrome has multiple facets. There is no direct one-to-one cause-effect relationship in any syndrome. In the AIDS syndrome drama, probably, the HIV virus could be the hero, but there are the heroine and other actors who are as important, if not more important, than the hero for the final outcome. No human illness should be viewed through a reductionist glass. Although the AIDS syndrome was first described way back in 1981 in two homosexual males, one in San Fransisco and the other in Paris, having similar clinical presentations and sure death, no one to date has shown that the HIV virus is the sole cause of AIDS. For the first time the announcement of a new disease in the scientific world came through a press conference and not through any scientific study published in a good peer-reviewed journal. Of course, lately lot of so-called researchers are jumping on to the AIDS bandwagon, mainly because the US National Institute of Health annual budget for AIDS research is $8 billion, while the cancer budget for the same period, is only $2 billion! “When it is a question of money, everybody is of the same religion” wrote the great French philosopher Voltaire. Scientists are no exception.
The drama of AIDS syndrome starts with poverty which is the mother of all illnesses. The poor and the very poor in the third world countries, especially Africa, are the worst hit. They have very little to eat and, consequently, have very low blood protein levels. Proteins are the antibodies to fight any disease. “Any disease is directly related to the virulence of the cause but inversely related to the resistance of the host,” wrote Theobald Smith, an American physician, in the year 1915. That was the beginning of the new science of host resistance, now called immunology. Up until that time the medical world was lost in the Koch’s postulates where the disease was caused by a germ. The host factor was not taken into consideration. Immunology progressed at a breath-taking speed only after white homosexuals died in 1981 with depressed immune systems.
Next to poverty, the other actors in the depressed immune system drama are the lifestyles that modern man has adopted for himself. Drug addiction, even tobacco and alcohol are bad drugs, unnatural sex habits—anal and oral sex—could depress the immune system by depositing the highly antigenic human semen into the gut, are the other actors! Many of the therapeutic drugs that we doctors give on long-term basis for chronic diseases add to the burden. Fear, extreme fear at that, could also depress the immune system. Therefore, in the AIDS drama there are many powerful actors that dictate the final outcome and not the HIV family of viruses alone.
In fact, the HIV viruses, probably, do not play such a major role. This was indirectly shown by the recent revelation that some of the prostitutes that have been in constant business in their trade have been strongly positive for the HIV virus antibodies since 1981. They are in robust health, though! Many of them have healthy children too. Saloma Khatoumi, a Nigerian, aged 42 years, is one such example. She has been servicing about 10-15 customers per night and has been HIV positive for decades but in good health. She has one healthy child, too. It is from her blood that the Oxford AIDS researchers found a peculiar phenomenon that a variant of the HIV virus could improve the immune functions! The Oxford Group has since produced a vaccine based on this knowledge. This vaccine is undergoing pilot trials and could be available for human use in the next decade or so.
The story of the anti-AIDS drugs has not been any different from many other anti-microbial drugs. Each one, from the first Sulpha and penicillin to the latest drug, has had a huge advertisement about its efficacy and its capacity to save lives. The truth, however, is that most of them have now created the monster of drug-resistant germs, called super bugs, that threaten to annihilate mankind on this planet, unless we wake up and do something about it. Not a single germ-related disease has been conquered by anti-microbial drugs to date. The only disease that man was able to eradicate, small pox, was done by vaccination that was in use in India for “times out of mind”. The saving grace would be the immune boosters that Indian medical systems had for thousands of years in use. The good news is that the Indian Council for Scientific and Industrial Research has been able to patent a very powerful immune booster derived from cow’s urine lately. Immune boosters would be the future panacea for immune depression syndromes of all hues.
“History repeats itself; if you do not learn from history you will have to relive history,” wrote Cicero, the great Roman thinker. India has learnt a very bad lesson in the past in the area of anti-TB drugs. Let us not repeat that with anti-AIDS drugs! Dr JR Bignall, one of the world’s greatest TB specialists, was invited by our government in 1956 to advice us about the TB scenario in the country. A few anti-TB drugs were intermittently available at that time. Bignall studied the disease pattern exhaustively and advised the government not to let those anti-TB drugs be used here for at least ten years! His argument was that if we get those drugs the use of the drugs will be irregular and that might produce-resistant germs of TB. If drugs are not used and the patients given proper food and sanitation, those that survive would get better and the germ dies in them because of the immune system. Those that are very bad would die anyway and the germ also dies with them, buried or burnt. In either case in the following ten years TB germs would almost disappear from India. But he said that detection and isolation was of paramount importance along with the sanatorium line of management.
The powers-that-be at that time ignored the report and today we have a huge amount of resistant TB in India that we will not be able to tackle. AIDS will pale into insignificance when you think of the ravages that the White Death (TB) caused in this world. It was worse than the Black Death of plague! Similar and still worse will be the fate of anti-viral drugs in AIDS. In the first place all anti-viral drugs are partially effective. They have serious side effects that the drug might kill quite a FEW victims. Apart from the drug company propaganda and education these drugs have not been shown to have made an impact on AIDS. What would make an impact is health promotion in our poor people. Good food, clean water, a roof on top of their heads, a toilet for every house to avoid the ravages of hookworms, and health education regarding safe sex, drug addiction, alcohol and tobacco would save millions of lives in the future.
There is no pill for every ill, but there is a definite ill following every pill. Only a holistic view would be beneficial. I am wondering as to when modern medicine would realize its folly and follow the correct science of holism, non-linear mathematics and the science of CHAOS. God save the poor people.
“Science is always wrong. It never solves a problem without creating new ones”—George Bernard Shaw
(Professor Dr BM Hegde, a Padma Bhushan awardee in 2010, is an MD, PhD, FRCP (London, Edinburgh, Glasgow & Dublin), FACC and FAMS. He is also Editor-in-Chief of the Journal of the Science of Healing Outcomes, Chairman of the State Health Society's Expert Committee, Govt of Bihar, Patna. He is former Vice Chancellor of Manipal University at Mangalore and former professor for Cardiology of the Middlesex Hospital Medical School, University of London. Prof Dr Hegde can be contacted at [email protected])