Regulations
Many Glaring Errors in SEBI PMS Data; Misleads Investors
The Securities and Exchange Board of India (SEBI) is putting out absurdly wrong numbers and data full of mistakes with regard to data for portfolio management services (PMS). 
 
SEBI has always been reluctant to share the data, which is key to helping investors choose the right portfolio manager. Earlier, the market regulator had stonewalled our queries on the grounds that PMS results were fiduciary information. In fact, Moneylife fought a hard battle with SEBI to get the data out in the public domain by filing Right to Information (RTI) applications and taking our appeal to the Central Information Commission (CIC), which ordered SEBI to put out the data in the first place. 
 
This finally forced SEBI to put out PMS performance data, but even that was done grudgingly and in a very difficult to access manner. It has now taken things to an irresponsible new low by putting out horrendously wrong data, as is established by some painstaking work by one of our readers. Take a look.
 
For October 2016, SEBI’s website shows that Anvil Wealth Management generated a return of 138% in one month.
 
 
The data also shows highly erratic returns – after showing returns of 113% to 130% for every month between May 2016 to November 2016, the return suddenly dips to 0% in December 2016 and shoots up to 126% in January 2017 and drops to 0% again in February 2017. How does one make sense of this?
 
 
Another company, Moneybee Securities Pvt Ltd, in shown to have generated a return of 42.63% in December 2016, when the market was down after demonetisation. 
 
 
Kotak Mahindra Asset Management Company reported a return of 113.07%, in October 2016 when the market was flat. In August 2016, when the market was sharply down, the Kotak Mahindra AMC managed a return of 65%.
 
 
Another PMS, NJ Advisory Services Pvt Ltd, reported return of 55.92% for July 2016, which was another flat month for the index. 
 
 
 
These returns are way too high to be generated in a period of one month even if the overall market is rising (bull market). Interestingly, some PMS schemes reporting very high returns show no increase assets under management (AUM). Our reader points out that “it is hard to believe that managers who has been doubling money every month is not able to attract a higher AUM”. 
 
The only conclusion one can draw is that the returns mentioned by SEBI’s website are wrong. 
 
What makes this particularly questionable is that SEBI’s website provides no details about how these returns were calculated and whether they are gross or net returns. Unless returns are properly calculated in a standardised format, it is likely to mislead investors into choosing the wrong scheme, and the source of the misinformation would the market regulator, whose mandate is to protect investors from such mistakes. 
 
By publishing such information about all PMS regulated by it, SEBI is expected to serve two objectives. One, help the investing public to access all information at one place and not have to visit 50 different websites and, two, eliminate the need for seeking such information under RTI, from time to time”. But the regulator seems extraordinarily reluctant to do so. 
 
However, SEBI had continued to openly defy this order for a long time. In May 2013, we wrote how SEBI was not ready to share PMS data despite CIC order  SEBI now provides this data but it is not easily accessible. And the data turns out to be wrong!
 
The data on most other schemes is also highly erratic and provides no clue to the ordinary investors as to the relative performance of each scheme. 
 
We sent an email to SEBI’s Communication Department and will upload their response as and when we receive it.

 

User

COMMENTS

Vinay Chaudhari

3 weeks ago

I guess that SEBI will probably say that data is "as provided" by PMS and they don't vouch for accuracy of data as stated in their disclaimer -
"Disclaimer: The performance of the PM has not been approved or recommended by SEBI nor SEBI certifies the accuracy or adequacy of the Monthly Report. The monthly report of the Portfolio Manager (PM) has been prepared by the individual Portfolio Manager as required by SEBI circular on " Monthly reporting by Portfolio Managers" dated October 08, 2010 and filed with SEBI. The monthly report, inter-alia, contains 'performance of the PM during the month'. It may be noted that the relationship between the PM and the client is contractual in nature and the PM mainly provides customized service taking into consideration the need of customers, their preferences, risk profiling, suitability etc. Further, no pooling is allowed and no units are issued as in the case Mutual fund. Therefore, the performance of one portfolio manager may not be comparable with the performance of another."

MAYURESH M CHOUDHARI

3 weeks ago

Kindly share the Link for PMS on the SEBI website, so that anyone can check for their Information.

REPLY

Vinay Chaudhari

In Reply to MAYURESH M CHOUDHARI 3 weeks ago

http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doPmr=yes

vikram chinmulgund

3 weeks ago

What would have been most useful is a linke to where SEBI has published this data online but this article doesnt seem to have the link.

Suryakant Acharya

4 weeks ago

Good initiation for investors

Suketu Shah

4 weeks ago

I am surprised how so so many people continue being fooled on and on into PMS inspite of so much awareness.

Gurudutt Mundkur

4 weeks ago

Congratulations for taking up a good cause. SEBI and other statutory bodies cannot affort to fool the public.
Raghram Rajan said that in PSUbanks, the lower levels are overpaid and the top are grossly underpaid.
So also in SEBI [I do not have any kith and kin working there] and hence hose working at the lower level play all the mischief.

Mr Jitendra

4 weeks ago

Moneylife can publish and provide the format in which the PMS data should be presented by SEBI. Probably SEBI does not know how to present the day and what data should be presented?

Akshat Jain

4 weeks ago

Cant find the link to the data. Can you please help me out with the link to the data in the maze of Sebi's website.

REPLY

Vinay Chaudhari

In Reply to Akshat Jain 3 weeks ago

http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doPmr=yes

SC says people without Aadhaar should not be deprived of any govt schemes till 7th July
The Supreme Court while refusing to pass any order or interim order in Aadhaar case had said that those who do not have the UID would not be deprived of any Government schemes or benefits till next date of hearing. The apex court has fixed 7th July as next date of hearing.
 
A vacation bench of Justices AM Khanwilkar and Navin Sinha while refusing any further clarificatory order opined that the decision in the PAN case was sufficient now. In the 9 June 2017 judgement, the apex court had upheld validity of a provision of the Income Tax Act making Aadhaar mandatory for allotment of PAN cards and filing of tax returns, but had put a partial stay on its implementation till a Constitution bench addressed the issue of right to privacy.

The Bench said, "In view of the observations made in the judgement in Para 90 of the case... decided on 9 June 2017, no further observation is required."

As the hearing begin, Additional Solicitor General Tushar Mehta raised a preliminary point about a rejoinder by petitioners, which he said requires a sur-rejoinder and sought time till next week to file the same. Mr Mehta told the bench that benefits of various social welfare schemes would be given to persons even if he or she does not have Aadhaar. Referring to the 8 February 2017 notification regarding benefits of the public distribution system (PDS) scheme, the ASG stated it was said that if someone does not have Aadhaar, he or she would get the benefit of these schemes by using other identity cards like voter ID, driving licence, passport and PAN card.
 
Mr Mehta also told the bench that the Centre has extended to 30 September 2017, the 30th June deadline for enrolment for those who do not have Aadhaar and are availing benefits of various social welfare schemes.

Senior Counsel Shyam Divan submitted that nobody should be deprived of benefits under any scheme till the next hearing and requested the Bench for an ad-interim order clarifying the same.

"No interim order can be passed in mandamus (restraining order) on mere apprehensions. You have to wait for one week. If somebody is deprived (of the benefits) you can point out the same to this court," the Bench told Mr Divan.

While posting the matter for further hearing on 7 July 2017, the Bench observed, "The state is a democratic welfare state which is saying that they will not deprive anyone of the benefits. Alternative IDs are valid as of now."
 
The apex court was hearing three separate petitions challenging government's notification making Aadhaar mandatory for availing benefits of various social welfare schemes.

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Despite Exposés and Embarrassments, Hundreds of Judges Preside in New York Without Law Degrees

The news releases are sent out with considerable regularity, brief and basic accounts of actions taken by the New York State Commission on Judicial Conduct: A judge is sanctioned for misconduct on the bench; another agrees to give up their job because of questionable behavior in his or her private life.

 

Many of the announcements note that the judges, as part of their agreement with the commission, pledge to never seek or accept a job as a judge again. And some of the announcements include a fact that still packs a 21st century punch of surprise: The judges being disciplined are not, and never have been, lawyers.

 

Take, for instance, the announcement the commission issued today, June 26: "The New York State Commission on Judicial Conduct announced that Gary M. Poole, a Justice of the Rose Town Court, Wayne County, will resign from office effective July 1, 2017, and has agreed never to seek or accept judicial office at any time in the future."

 

Poole consented to resign after the commission began investigating claims that he engaged in "repeated, undignified and discourteous conduct toward a woman with whom he had been involved romantically."

 

Poole agreed to accept the commission's action and signed a stipulation laying out the charges and results. He also waived any confidentiality protections and signed the stipulation knowing it would be made public.

 

"Among other things," the commission's announcement read, "the judge was alleged to have yelled demeaning and derogatory things about her and her new boyfriend in public, spuriously threatened her with prosecution, demanded the return of certain personal property and threatened to encourage her ex-husband to commence a custody battle over her children."

 

And then the final line: "Judge Poole, who is not an attorney, has served as a Justice of the Rose Town Court since 1993."

 

That some judges in New York state are not required to be lawyers, or to have any formal legal training, has been a little-understood fact for much of the last century. It has, on occasion, drawn some notice. In 2006, The New York Times published a broad and damning series on the work of what are known as town and village justices, some 2,000 or so of whom hold court in the state. It made for remarkable reading:

 

"Some of the courtrooms are not even courtrooms: tiny offices or basement rooms without a judge's bench or jury box. Sometimes the public is not admitted, witnesses are not sworn to tell the truth, and there is no word-for-word record of the proceedings.

 

Nearly three-quarters of the judges are not lawyers, and many — truck drivers, sewer workers or laborers — have scant grasp of the most basic legal principles. Some never got through high school, and at least one went no further than grade school.

 

But serious things happen in these little rooms all over New York State. People have been sent to jail without a guilty plea or a trial, or tossed from their homes without a proper proceeding. In violation of the law, defendants have been refused lawyers, or sentenced to weeks in jail because they cannot pay a fine. Frightened women have been denied protection from abuse.

 

The examination found overwhelming evidence that decade after decade and up to this day, people have often been denied fundamental legal rights. Defendants have been jailed illegally. Others have been subjected to racial and sexual bigotry so explicit it seems to come from some other place and time. People have been denied the right to a trial, an impartial judge and the presumption of innocence ...

 

The reporting by the Times provoked real and promised reforms. But what many felt was the core problem — not requiring the justices to be lawyers — remained unchanged.

 

And so the announcements still come from the judicial conduct committee.

 

June 22, 2017: A justice of the Rossie Town Court in St. Lawrence County resigned and agreed never to seek or accept judicial office at any time in the future after being accused of mishandling court funds and failing for years to file the dispositions of hundreds of cases over half a dozen years. The justice was not a lawyer.

 

June 21, 2017: A justice of the Spring Valley Village Court in Rockland County resigned from office, according to the commission, because his felony record disqualified him from being a judge. Despite a 1978 felony conviction, the judge had been appointed to fill a vacancy on the town bench after the prior judge had been removed from office by the commission.

 

"Judge Michel was ineligible to serve as a village justice in the first place because he is a convicted felon," the commission said. "Under the circumstances, his departure from office was inevitable, and his agreement to do so sooner rather than be forced into it later was responsible."

 

May 18, 2017: A justice in a town court in Broome County was ordered by the commission to be removed from office for trying to get his daughter's traffic ticket fixed and improperly trying to influence the judge who was handling appeals of the justice's decisions. The judge was not a lawyer.

 

The list goes on — a justice removed for drunk driving; another for physically abusing a colleague; another who, while not a lawyer himself, had nonetheless intervened in a friend's case in another court by appearing as the friend's lawyer.

 

The commission, first created in 1978, has responsibility for some 3,400 judges at all levels statewide. It handles close to 2,000 complaints a year, and, of course, any number of them can involve judges who are lawyers and who are handling cases in the state's more professional courts.

 

Just last week, in fact, the commission announced the retirement of a judge working in state Supreme Court. He agreed never to seek or accept judicial office at any time in the future after it was revealed that he'd been accepting his six-figure salary despite never reporting to work for several years because of a health issue.

 

But the majority of the cases resulting in action involve the town and village judges. Marisa Harrison, the public records officer at the commission, said 70 of the cases resulting in discipline over the course of the commission's existence dealt with such judges.

 

In 2006, the Times listed the explanations for the enduring existence of untrained judges in New York State:

 

"The powerful idea that communities should choose their own destinies, including their own judges. The considerable costs of updating courtrooms and hiring lawyers to preside. The always-popular calls to keep lawyers out of people's lives. And, not least, the power of the justices, who are often important players in local politics, wired into the same party mechanisms that produce the state's lawmakers, judges and governors."

 

In an email exchange, Robert Tembeckjian, the commission's administrator, said "the commission has advocated some reforms regarding the town and village courts.

 

"Two in particular that have come to pass are the recording of all proceedings — the court system has supplied every town and village court with laptops that have audio capability, and a rule of the Chief Administrative Judge requires all proceedings to be recorded and maintained, and more extensive ethics training for judges, which has resulted in the State Magistrates Association having commission staff make ethics presentations at all of their annual meetings and many of their regional meetings."

 

Tembeckjian said the commission has not taken a position on whether to require all town and village justices to be lawyers, or whether to replace the current system with a full-time regional alternative such as a district court.

 

"One recent recommendation we have made that has not been implemented yet: a formal training and education program for town and village court clerks that would include accounting training, since maintenance of court fines and records is an important fiduciary responsibility of the town and village courts and the judges that is often delegated to the court clerks," Tembeckjian said.

 

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