SC issues notices former Satyam MD, 4 others

New Delhi: The Supreme Court (SC) today asked former Satyam managing director B Rama Raju and four others, accused in Rs14,000-crore accounting fraud in Satyam, as to why their bails should not be cancelled, reports PTI.

The Supreme Court bench comprising justice Deepak Verma and justice Dalbeer Bhandari issued notices to the five accused on a petition filed by CBI.

The Andhra Pradesh high court in July had granted bails to Rama Raju, brother of Satyam founder B Ramalinga Raju, former Satyam CFO V Srinivas and three others - former IT company employees G Ramakrishna, Venkatapathi Raju and Ch Srisailam accused in the India's largest corporate fraud.

Satyam founder Ramalinga Raju, Rama Raju and eight others were arrested last year after the former admitted to fudging the accounts of the IT company.

Solicitor General Gopal Subramanium appearing for CBI submitted before the court that these are the persons who have recruited some of the key witnesses in Satyam and may alter the evidences.

The Supreme Court asked the five accused to reply within a week.


How SEBI killed the IFA: A murder investigation report-II

The IFA (Independent/Individual Financial Advisor) is on life support, suspected dead — and the prime suspect is the Securities and Exchange Board of India (SEBI). What can be done to revive the industry?

In the last article (see: we had explored how the measures taken by SEBI have delivered a body blow to the mutual fund (MF) industry. In this piece, we try to examine the issue further.

Change always hurts. However, when necessary, it should be brought about in the face of resistance from all sides - because this change necessarily involves trampling on someone's toes and upsetting some apple carts.  In this respect, hats off to SEBI!
I do agree with 95% of the changes made by SEBI. I disagreed with the dual load structure - one for institutions and one for retail investors. I complained about this to the industry CEOs and it was like banging one's head against a stonewall - they would not listen - because it was convenient for them to ignore me. 

However, I disagreed with a few changes e.g. making the Sensex and Nifty as the sole benchmarks for equity funds - this does not make sense as MF schemes should be pitched against a similar rival if their performance is to be properly gauged.
While dealing with human beings, one has to be extra sensitive and careful because changes can cause irreversible psychological damage - which leave permanent scars. It also affects a person's ability to live e.g., pay bills, meet commitments, pay for the education of children, etc. The distributors have been damaged severely - both psychologically and financially - many have actually become nervous wrecks.
In advanced countries changes are made in a more caring and humane manner. The persons affected are given 3-5 years before a change is made, so that they can prepare for it. If they do not prepare for the change they have no reason to complain, because they have ample time to gear up for any eventuality. However with our wild bureaucrats, we cannot expect anything other than the 'rough and ready' treatment because they want to show that they have achieved something during their tenure and want their names in the 'Hall of Fame' - irrespective of the damage they have caused. Adolf Hitler and Genghis Khan come to mind when you examine their behaviour.  
In this respect, SEBI has been extremely unfair to distributors. To make things worse, the ones affected are those who have been serving their clients diligently and honestly and so do not understand why they are being punished. The ones who have mis-sold are essentially the bankers and a few big/ignorant/dishonest distributors. The bankers have got promotions from the mis-selling and are enjoying the fun. The big distributors have piled up huge assets and now have the holding power with their huge trail brokerage. The persons affected are the honest and sincere medium/small-sized distributors who have been serving their clients diligently - also there is a huge entry barrier for new vocations in this line - which is stifling talent.
If SEBI merely wanted transparency then they should have first put the new remuneration structure in place and then abolished upfront brokerage. They should have printed uniform forms across the MF industry with a column for the commission rate to be mentioned - it would have had the transparency that was required and also would have been fair to the distributor - there would have been a smooth transition. SEBI actually wanted to punish and destroy the distributor community because they have not understood the need for a distributor - this is the truth of the matter. The regulator's aim is to replicate its success in share regulation upon the MF industry - which is not possible - MFs are different products altogether.
SEBI has effectively abolished the remuneration of the distributors by asking them to collect them from the investor - when in fact, commissions have never been collected from investors in this manner. Thus investors are refusing to pay even the brightest minds for excellent services.  SEBI's 'solution' is quite utopian.  SEBI's staffers are earning fat salaries, CEOs of MF houses along with their staff and fund managers are earning fabulous packets - but the distributor (who is a soft target) is expected to work for free! This is not fair. This has made distributors stop working; and the industry has screeched to a grinding halt. You cannot blame the distributor for not working for free - but you can blame the authorities for wanting them to do the same. So thanks to the new regulations, the MF industry has been held at ransom for one year and investors, whom SEBI is supposed to protect, have been left stranded.
Before I end, let us look at how abolishing the remuneration structure has defeated the very purpose of the mutual fund industry:

  • MFs sell units i.e., small amounts. They are meant for the small investor - richer players can afford consultants of their own.
  • MFs are meant to garner money from schemes like Systematic Investment Plans (SIPs) where monthly investments can be as low as Rs1,000.
  • Again, in an SIP of Rs1,000 - assuming the distributor is charging 1% as commission - do you mean to say that he has to send a bill of Rs10 every month to the investor? So these small investors - for whom the MF industry has come into existence - are ignored. It cuts into the very heart of the formation of MFs; SEBI should amend its rules before the industry collapses completely.

(Ms S Rodrigues is a financial and investment consultant based in Pune. She has, of course, used a pseudonym).




7 years ago

Mr Bhave u have completly demolished MF.India can not grow when there are person like u roaming around having no work only to make some decission that kills many people

Shibaji dash

7 years ago

Will Mr. Bhave time at hand to fulfil his promise to bring to an end the mischief of each of 400 and odd Fund Houses having at least 25 shcemes for traded shares of only 500 companies. Using different nomenclatures without any difference is a perfidy and amounts to an act of a public enemy. One fails to find any sense in the medieval zeal with which SEBI went after the IFAs giving it priority over the long due need to streamline the multiple schemes that confuse, scare and rob the MF investors, HNIs excluded. There is no free lunch in life. But SEBI expects to serve the non-rich investors free pro bono.As suggested, a remuneration regime would have been a simple solution. One need not forget that collusions are all over and you can't stop it by measures that looks like shooting one's own feet.

anand gupta

7 years ago

may GOD give peace to sebi chief soul

but why
if this happen
evevrbody would become killer

jignesh n vyas

7 years ago

I agree to mr. shankar. jab ap uper jat ho to accha kam sat ma ata hi.Mr. bhave kasi ka pat pa lat mut maro. Kan katina pasa khata hi hum sab janta hi. ya public hi.


7 years ago

jab kisia ka antim samay najdik ata hai to woh bahut phapharata hai...Mr bhave ka bhi yehi hal hai..sayad life mei koi aisa kam nahi kar paia jise famous ho..isliya ye kiya...famous to hua lekin bahuton ka baddua lekar

Ashish J Mehta

7 years ago

Every good or bad thing comes to an end.
Expiry date of C B Bhave fixed by Govt. is Feb-2011.
Let him dance till then.


7 years ago


Roopsingh solanki

7 years ago

Dear friends Anand and Jignesh-i liked your great courage og challenging SEBI-but friends-it is not a individual fight-it is fight of DHARMA YUDDHA like mahabharat-which was fought for establishment of legal rights-same way we are loosers like Pandavas who need to fight to a big enemy who are not strangers-but instead of fighting alone-let all AMC and distributors get united and then give a united fight- i want to ask AMC chiefs that they launch big meets and big star hotels for NFO and other promotional schemes-why dont they call a meeting togather (ALL AMC"S altogather)-to discuss the issue in all cities and then give a call of ""CHALO MUMBAI AND GHERO SEBI KO"".AMC's ahve all resources to do this job-ad they should come forward because they are big loosers due to SEBI fatwas-so why they hesitate to come forward and heistate to launch a nation-wide campaign to agitate-NSE is regulated by SEBI(in theory) but in practical NSE is regulating SEBI which is evident by recent hike in arbitration fees-and all FATWAS issued by SEBI have been so far benificial to NSE and killer of IFA's-so lets wait for few more time-i am sure-AMC will find this option only way left and then they will fight unitedly including IFA's-it is going to happen soon.


7 years ago

SEBI chairman ko KIRE Parange...Mr bhave to angrez ka bhi baap nikla...Angrez to phir bhi paraia tha par Mr bhave to Hindustan ka hi hai....Hindustanio ke sath aisa nahi karna chahia tha


7 years ago

I think, SEBI is big brother of capital markdet. Whatever they done in between aircondition room. They have no communication within the investors or IFA. Mutual Fund industries now going to be face a critical position. AUM of fund houses overall Industries AUM drastically fall last two months. It will be continue, if seriously not taken any action for this. IFA are the pillars of the Industries. If they crying, Industries must crying.


7 years ago

well done SEBI I know that sebi chief is done right work but problem is that way of work .give time every one 2 to 3 years and use these rules. if u have any problem with IFA then wait for FEB 2010 chanda laga ker ghar ka khracha de denge

jignesh n vyas

7 years ago

I am also challenging to sebi what ever worst. I services my all clint till date. Mr bhave ap ka abhi mardo se pal pada hi.


7 years ago

i am challenging sebi whatever WORST he want to do
but we will ALWAYS BE THERE......
but whether he is sure that after 6 month he would be where?????????????????????????????????

jignesh n vyas

7 years ago

sebi all ready fail for abolish rule of up fornt commission. It is very difficult for charge for 500 or 1000 sip. I know how much distributor charge fee ? Varibal load introduce .

Ranjan D Gupta

7 years ago

Whatever written by S.Rodrigues is absolutely true.The main sufferer are the small and medium distributors.It is rightly said in no industry the service provider need to beg for his service rendered with high integrity,professionalism,and diligence.If an investor does not pay what the advisor can do.Can Sebi throw some light on this aspect.How Sebi can help distributors to realise their legitimate earning from that investor. It is a matter of pity that my close friend whom i advised for good MF investments had not paid me my fees.His investments grown over 8% in two months. Who will come and save distributors.

Weekly Market View: Weakness may continue

The market managed a flat closing with a positive bias on the first trading day of the week amid a highly volatile session. It ended marginally lower on Tuesday on weak economic data from Europe that was announced on Monday. Lower-than-expected existing home sales data from the US dragged the markets lower all over the world on Wednesday and India was no exception. Bargain-hunting towards the end of the session helped the indices settle with marginal gains on Thursday. The market went into a tailspin on Friday, ahead of Federal Reserve Ben Bernanke's at an annual symposium at Jackson Hole, Wyoming.

For the week ended 27th August, the Sensex was down 403 points (2%) at 17.998 and the Nifty was down 122 points (2%) at 5,408.

The top Sensex performers during the week were Oil & Natural Gas Corporation (up 5%), Bharti Airtel (up 2%), NTPC and State Bank of India (SBI) (up 1% each). The top Sensex losers were Jaiprakash Associates (down 9%), Reliance Infrastructure (R-Infra), Hindalco Industries, DLF (down 8% each) and Hero Honda Motors (down 7%).

The BSE Consumer Durables (CD) index was the lone gainer in the sectoral space during the week, up 1%. The sectoral losers on a weekly basis were BSE Realty index (down 9%) and BSE Metal (down 3%).

The government this week extended sops worth Rs1,052 crore to exporters, particularly for the labour-intensive textile, handicrafts and leather sectors, to help them see through the fragile economic recovery globally.

However, the Centre made it clear that the popular Duty Entitlement Pass Book (DEPB) scheme, which has been in vogue for over a decade, is being extended for the last time. The government also extended the zero-duty Export Promotion Capital Goods (EPCG) scheme by one year to 31 March 2012. The scheme, which was announced in August last year, was to expire on 31 March 2011.

Food inflation moderated for the second straight week in the week ended 14th August to 10.05% as vegetables turned cheaper, but analysts said price volatility will continue till October when fresh crops arrive in markets.

Inflation in food items dipped marginally from 10.35% in the previous week. It was 13.45% in the same period last year and had crossed 20% in December 2009.

Fuel inflation remained steady at 12.57%, as the recent hike in prices of petrol, diesel and other related products have already been accounted.

Overall inflation, as measured by the wholesale price index (WPI), fell to single-digits at 9.97% in July, after a gap of five months.

Key infrastructure industries registered a sluggish growth of 3.9% in July that experts say may come in the way of double-digit expansion in overall industrial output. The six core industries - crude oil, petroleum refinery products, coal, electricity, cement and finished steel - had registered a 3.6% growth in June this year. The growth rate was 3.2% in July 2009, data released by the commerce and industry ministry said.

The Cabinet approved the much-awaited Direct Tax Code (DTC) Bill, which is likely to be tabled in Parliament during the ongoing monsoon session and referred to a select committee of members of both the houses.

The bill proposes to raise the income tax exemption limit from the present Rs1.6 lakh to Rs2 lakh. It also seeks to remove surcharge and cesses on corporate tax, providing relief to business houses.

Ending months of wrangling between the treasury benches and the opposition, the Lok Sabha approved the 'Civil Liability for Nuclear Damages Bill' after the government dropped the contentious provision of "intent" in case of accidents.

The bill seeks to fix the liability cap on operators in case of accidents at Rs10,000 crore, instead of Rs1,500 crore proposed earlier.

On the international front, US Federal Reserve chief Ben Bernanke on Friday said that the central bank 'would do its best' to prevent the country from slipping back into a recession. He portrayed a scenario for continued expansion as households rebuild their savings, banks increase lending and companies become more willing to hire.

Meanwhile, the US Commerce Department lowered its estimate for gross domestic product in the second quarter to an annual pace of 1.6% from an initially reported 2.4%.

Back home, auto and SUV major Mahindra & Mahindra (M&M) earlier this week signed a memorandum of understanding (MoU) with South Korea-based Ssangyong Motor Company (SMC). The Indian major said that the signing of the MoU will be followed by "a detailed due diligence process and finalisation of definitive agreements."

The company, however, was tight-lipped on the sum that it had agreed to pay to emerge as the preferred bidder for the South Korean automaker, which has a debt of $640 million.


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