An army officer narrates his harrowing tale of how his life savings got wiped out at Motilal Oswal, his victory in consumer courts and how SEBI took the brokers’ side despite clear grounds of fraud and forgery. And SEBI is supposed to protect investors’ interests!
The very first sentence in The Securities and Exchange Board of India (SEBI) Act, 1992 states as follows:
”An Act to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto”.
Has SEBI lived upto this? Or does it work for the big guns of the industry. Hear my story and you be the judge.
I opened an account with Motilal Oswal Securities (MOSL) on 14 February 2006. Three months later, by 26 May 2006, I got wiped out. I had become a victim of unauthorised trading. I signed NO delivery instruction slips and yet my stocks were sold. I still wonder how! The broker will not tell me how he managed to dispose off my stocks without my authorisation/delivery instruction slip. My life savings were liquidated. I was seriously considering suicide. It took me two years to come out of the shock and the consequent severe setback to my health. Even to this day I am unable to comprehend how a broker can do it so audaciously and still get away. Unbelievable but true.
SEBI is fully aware of such a rampant practice and has issued a notification about it a year ago. (http://www.sebi.gov.in/cms/sebi_data/attachdocs/1314271320898.pdf )
I went to District Consumer Forum. I have never been to any court in my life up until then. My lawyer lost the case. Most lawyers do not even know what demat is. I went on to appeal to the state commission, in Bangalore. This time I decided to argue the case myself. The judge was convinced of my plea and sent the case back to District Forum for retrial, directing all evidences and witnesses be examined thoroughly.
The retrial was exhaustive and took a long time. At the fag end of the retrial, for the first time, MOSL stated that the sale was done on the basis of Power Of Attorney (POA) given by me. This was a surprise not only to me but also to the court to whom MOSL had earlier given the copies of agreements, under oath, which did not contain any POA. I never signed any POA and a senior MOSL official gave a letter in writing to the court to that effect!
The District Forum found out that the POA turned out to be bogus and gave a speaking judgement in my favour, pointing out all the flaws and infirmities, in detail, covering about four pages on the POA alone. My signature, it noted, was a photocopy as I never signed any POA. This judgement was later fully upheld by the state commission.
On 7 July 2011, I lodged a complaint to SEBI (vide SCORES-SEBIE/MH11/0000764/1) through its SCORES redressal mechanism, and, along with it, I sent the full judgement copy. On 21 April 2012, after nine and a half months (!), SEBI disposed off my complaint in an evasive and indifferent manner. I thought SEBI will be outraged to hear that stocks are sold away on the basis of such bogus and fraudulent POA. I was so wrong! SEBI was least perturbed as if it was a routine matter to them.
SEBI acted like a post office—it sent my SCORES complaint to CDSL to whom MOSL, this time, produced an entirely different POA, somewhat correcting the mistakes pointed out by the consumer court, again with my signature photocopied. Strangely, neither CDSL nor SEBI found it odd and weird that any one would sign two POAs on the same day for the same purpose! Both POAs did not have proper identifiable witnesses. The date of signing the document was overwritten and the place was scribbled in one and absent in the other. In the second POA, the seal of the authorised signatory is not MOSL while the first POA, it is different from the one that is in the main agreement.
If only our SEBI is fair and strong, will any broker dare indulge in such acts which erode the very sanctity of stock market operations of our country.
SEBI just did not want to be bothered about looking into all this, despite nine and a half months, an inordinate time it had taken. What did SEBI do for nine and a half months with my complaint? CDSL, predictably, upheld the broker's version and SEBI did the post office act of forwarding that to me. Will any broker own up to the crime committed? Why did SEBI fail to apply its mind?
Had SEBI applied its mind, it would not have taken it more than nine and a half days to verify and come out with a ruling worthy of the trust and mandate conferred on it by the nation. Even an illiterate person would have discerned the blatant fraud, which is so very obvious, prima-facie. Yet SEBI chose to be blind, intentionally or otherwise.
When I make such a serious complaint, even providing all the proof, the least I expected was to be told by SEBI whether my complaint is valid or not. If valid, I am entitled to know that action is taken by SEBI. If not, I am entitled to know the reason. Consumer courts did a far more superior, better and speedier professional job than SEBI.
After seeing the indifferent and callous way SEBI disposed off my complaint, I wrote to all the concerned SEBI officials, with a copy to the Chairman, SEBI. No one, including, of course, the Chairman cared to reply, one way or the other. I wonder why? Is this the way SEBI believes in 'protecting investor interests'?
I feel exasperated that I am left with no other option except to write this open letter. I am enclosing copy of my mail addressed to no less a person than President of India himself, who until recently was the finance minister. I thought it is my duty to let the President know, especially when there is a call to induct more investors by giving tax incentives.
Will SEBI ‘protect the interests of investors '? Will investors also have to run from pillar to post, because of an indifferent SEBI? Will they also get the same apathetic treatment after they lose everything and approach SEBI for justice?
(Wing Commander CR Mohan Raj VM [Retd] is a winner of Vayu Sena Medal [Presidential Award] for gallantry in the Indo-Pak war in 1971.)
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