Market participants struggling under SEBI’s autocratic rules have been left smarting as the market regulator proposes unprecedented doubling of salary for its employees with retrospective effect
Market regulator Securities and Exchange Board of India (SEBI) has proposed to almost double the salaries of some employees, with retrospective effect from November 2007, according to some media reports. Not surprisingly, this has come as a rude shock to various market participants, including intermediaries and investors, who are facing the brunt of SEBI's shoddy attempts at changing the investment landscape in the country.
A series of ill-conceived initiatives on the part of SEBI to improve the regulatory framework in the securities market has left participants in the lurch. Intermediaries in the mutual fund industry have been left gasping for breath after SEBI removed the entry load on mutual funds, effectively taking out the incentives for distributors. This was followed by a whole set of regulatory changes that have altered the structure of the industry.
The result is that half the independent distributors in the country have either been wiped out or are struggling for survival. It is hardly any surprise then, that intermediaries are cursing the regulator for even considering such a fat pay-day for its employees. An intermediary remarked on the Moneylife website, "On the one hand, distributors are struggling for livelihood as small investors are no more interested. On the other, we have this Diwali bonanza for employees. This is (the kind of) justice (we get) in India."
The fact that SEBI has proposed to implement the salary hike with retrospective effect has raised eyebrows even higher. This is an unprecedented payout for a government organisation that is supposed to work for the benefit of investors. There are fears that SEBI's move will now be followed by similar proposals from other government institutions. No doubt, if this proposal goes through, others will look to line up for fat paycheques for their own employees.
Already, SEBI has among the best perks in the business. Officers from the income-tax and enforcement directorate are queuing up for job opportunities in this glamorous organisation. Why will they not, when it offers all kinds of benefits in terms of housing, travelling and what not. Investors are particularly incensed as all this comes against the backdrop of poor quality of work done by SEBI officials in the past few years.
An investor, Amit Bhargava, told Moneylife, "I fail to understand why the tax payers be burdened with this excess expenditure on the salaries of officers who have miserably failed to perform and as per my own experience are working against the interest of the investors and harass them when complaints are made. Such officers/organisations need to be punished rather than gifted with such retroactive salary hikes that even make the salary of the cabinet secretary look small."
Moneylife had earlier pointed out how SEBI went against the very grain of its existence to implement an 11-times hike in its arbitration fees that could actually deter investors from seeking justice. Such and more moves from the regulator have not gone down well with the investing public. SEBI's decision to reward itself with such opulence in the light of the work done has shocked investors to the core. We wonder how the powers-that-be at the finance ministry are going to react to this proposal.
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