Power of RTI: CIC directs SEBI to disclose all information related to PMS

For the first time, investors of scores of portfolio management schemes run by banks and brokers will be able to access information on their performance and track-record on the SEBI website. This follows an order by the Chief Information Commissioner under the RTI Act. SEBI has been asked to upload this information from April 2013

In a pathbreaking order, the Chief Information Commissioner (CIC) Satyananda Mishra, at a hearing conducted on 17 January 2012 in Mumbai has directed the Securities and Exchange Board of India (SEBI) to put up monthly information of individual Portfolio Management Services (PMS) on its website effective from April 2013. Once the data is put up, it will allow investors to compare and contrast various PMS schemes and make careful and informed decisions, based on their track record before entrusting sums starting from a whopping Rs25 lakh or more to portfolio managers.
 

This order not only represents a big victory for Indian investors and comes at the end of a long battle by Moneylife to ask the regulator to make PMS schemes more transparent. For the past three years, Moneylife has also helped several investors recover funds, wrongly deducted by PMS. The wrongful losses  have extended from a few lakh to as much as Rs1 crore.
 

The CIC’s order said, “We have carefully considered the facts of the case and the submissions made before us. It is an admitted fact that the desired information is available with SEBI, if not on an annual basis, at least on a monthly basis. Since this information is received electronically, it’s publication through the website would not be a difficult task. By publishing such information about all Portfolio Management Services (PMS) regulated by it, SEBI would 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”.
 

The CIC goes on to say, “We would like to direct that the monthly information received from the Portfolio Management Services (PMS) which can be disclosed without attracting any of the exemptions provisions of the Right to Information (RTI) Act should be published on the SEBI website beginning April 2013 and an intimation sent to the Appellant in this case about this.”
 

This has been a long battle for Moneylife.  Our request for information was repeatedly rejected until we approached the CIC. Interestingly, Moneylife has been informally requesting SEBI to upload PMS performance information on its website for several years, but it refused to do so. In fact, after several hard-hitting reports about how leading banks and finance companies had damaged investors’ savings, SEBI issued an order asking them to disclose three years performance on its website and on application forms. But this was clearly not enough, since it did not allow comparison of authentic records.
 

In the final hearing before the CIC through a video conference, Gaurang Damani, a well known Mumbai-based activist appeared on our behalf. He argued that PMS is a very complex product requiring careful comparative analysis as parting with serious investment in the region of Rs25 lakh. Therefore, it was of utmost importance for people to have comparative data and it was not feasible to access the websites of 40 odd PMS providers to get the required information. While SEBI had irrationally taken the stand that this information was “fiduciary” in nature, we made the point that this information was already in the public domain, under SEBI’s own direction. All that we wanted was that the data be made available at one source. It is ironical that information dissemination, which is key to SEBI’s disclosure based regulatory regime, is likely to be put in the public domain only after a long battle with the regulator. The CIC heard our appeal on 17 January 2012. Convinced of our argument, CIC directed SEBI to put up information on the website.
 

Moneylife filed its first RTI query in 8 February 2012 after over two years of following up with SEBI to put out information on portfolio returns, assets under management (AUM), fees, etc, for individual PMS schemes on its website. Our application had been rejected on flimsy grounds (SEBI misrepresents public information on PMS as fiduciary; offers mindless response to simple RTI query).
 

We filed a first appeal to SEBI’s appellate authority on 26 April 2012. This was rejected on the grounds that—“It maybe true that AUM of PMS may be available on the website of PMS. It may also be true that SEBI may receive AUM from each of the PMS for regulatory purposes. However, to provide the information in the form sought, SEBI will have to compile the information. SEBI is not expected to compile the information to suit the need of individuals.” The arrogant callousness of the response should be seen in the context that SEBI itself has an investor education fund with crores of rupees, but won’t make the effort to compile and upload data and information that is crucial for a sensible investor to make an informed decision.  The attitude also exposes the hypocrisy of all the spending on financial education and financial literacy that is being mandated and pushed by the regulator.
 

The genesis of our battle for transparency in PMS performance was the saga of investor Rajan Manchanda, who lost a whopping Rs1 crore when it invested more than Rs2 crore with Kotak PMS (Sordid tales). In other words, half of his portfolio got wiped out and SEBI did little to help.
 

Another investor who approached Moneylife saw 30% of his Rs52 lakh evaporate when he invested in a PMS scheme. For more details, check out this article we had written: Broking Houses Make Investors Go Broke.
 

A doctor saw a big chunk of her PMS investment vanishing after investing in JM’s portfolio schemes. She managed to get a few lakh rupees back after help from Moneylife. We had also compiled investors’ views on PMS here: Bad Experience.
 

Simply put, most investors do not know where to find information regarding PMS. Since they do not have information readily, they will not be able to verify deceiving numbers thrown around by ambitious sales persons. At the end of the day, they need to know if the high commission is worthwhile before parting with Rs25 lakh. Thus, with the information put up, now they will be in a better position to decide.
 

Other stories covered by Moneylife on PMS can be accessed below:

Kotak PMS: Among the worst in the business?
Portfolio Management Schemes leave investors with a big hole in their pocket

Wake-up call for regulators

Comments
Vinay Joshi
10 years ago
Has SEBI sent intimation to the appelant in accordance with the CIC order?

If not why? It may even consider an appeal at the behest of vested interests!

Regards,
Vinay Joshi
10 years ago
Hello,

None have talked about PMS siphoning ill gotten on behalf of it's XHNI clientele!

Had i appeared for the said hearing,[video conferencing] as was requested, the said hearing with CIC i would have forced CIC to SEEK details from RBI vis-a-vis from it's foreign banks.

CIC can ask RBI but not IT to disclose individual a/cs.

HNI loosing in PMS is as good as pyramid schemes attracting common persons.

Well, PMS deciphered to choose on SEBI's site - then what?

How many HNI compare their insurance plans? OR for that matter any one else?

At the moment i'm not going into US Banks penalized for thier clients tax aversion.

Before the FinMin or MoF, reveals Indians stashed money, its scary, 30% of GDP!?

It's said [speculated] by NCAER, NIFM, NIPFP,in it's reports.

As of now the C.Govt has tracked only 50KCR in last three years.

The revenue dept. is pursuing 50K isolated transactions info from overseas. But it gets mired in legal loopholes like IT/CBI/ED & political.

Nothing happens! What has happened to Hassan Ali? What has happened to SpeakAsia perpetrators?

We yet have to SEE the SEBI revealing PMS & thereafter holding them responsible!

On mediclaim an ad says - within six hrs will respond- BUT DOESN'T STATE WHEN CASHLESS CLAIM WILL BE SETTLED?

Regards,


Sucheta Dalal
Replied to Vinay Joshi comment 10 years ago
Well. There is a lot to be done and Moneylife Foundation is always looking for supporters who do not attach 20 conditions to their time. So is we have help, we will take up many more issues.
thank you!
Vinay Joshi
Replied to Sucheta Dalal comment 10 years ago
Hello Ms.Sucheta,

Read your reply with due diligence.

CIC is quasi judicial an authority, any third person appearing in the [then]ongoing final hearing - always will ask for statement of facts & grounds of appeal in addition to earlier orders of PIO.

The said person has to do his 'homework' by evaluating certain earlier, by CBDT & or the judiciary orders/judgments. Appearing & CIC quashing it would have been "prejudicial".

Priority of work is essential.

We have moved to a further an issue from simplicity of PMS.

Of course you have accessed CBDT manual aims [manifested]to plug overseas transfers of funds / transactions, tax evasion.

BUT NOW WHAT? Will PMS be disciplined? Who will act then?

Regards,
Suiketu Shah
10 years ago
Ms Dalal

Congratulations on ml initiative.It would be great if at yr earliest convenience,ml can publish based on its own research ,ml opinion about all "wealth management" companies offering PMS.This wl save the hard earned money of several people in India from several corporates who offer false promises with the intention of legalised swindling.

Rgds
Suketu
Nilesh KAMERKAR
Replied to Suiketu Shah comment 10 years ago
How can Team Moneylife save those who are ever willing to wink their eye at first given opportunity.

The only way MDT can save these type of people is by getting them to sign an agreement. An agreement that first and foremost brings in disciplined behaviour from those who think of themselves as investors - but behave like gamblers
Suiketu Shah
Replied to Nilesh KAMERKAR comment 10 years ago
If we behave like gamblers how come we are much more happy and successful follwogin moneylife's recommendations only.Clearly HDFC is a cheat and fraud and have vested interests.Mind you I ignored all their tips I have stated on moneylife but the time has come to ban abnd blacklist them.Nilesh you seem to have vested interests in putting words in my mouth to protect HDFC Banks name in every which way.Smell the coffee-none of the raders need cheats like HDFC Sec.All one needs is moneylife.

Moneylife doesnot need to save me-you need to save HDFC Bank as all their fake "forced" tips are on my tape all which I have ignored.You need to save their reputation,donot worry about me and moneylife which is the most credible publication in India.

Suketu
Nilesh KAMERKAR
Replied to Suiketu Shah comment 10 years ago

Mr. Suketu Shah,

I have nothing more to add.











Suiketu Shah
Replied to Nilesh KAMERKAR comment 10 years ago
Everything is crystal clear as well.This is the beauty of moneylife,the most credible publication in India and most reliable for equities, by far, I have found in India.

suketu Shah

Nilesh KAMERKAR
Replied to Suiketu Shah comment 10 years ago
100% agree with you only on this one thing . . . everything else remains.

Suiketu Shah
Replied to Nilesh KAMERKAR comment 10 years ago
I donot know who you are and what you are trying to say by yr comments above.One thing is certain-HDFC Bank/HDFC Sec are awfully undesirable for customers in every which way and is the ideal bank to send enemies to.Thank you.
Suiketu Shah
Replied to Nilesh KAMERKAR comment 10 years ago
If we behave like gamblers how come we are much more happy and successful follwogin moneylife's recommendations only.Clearly HDFC is a cheat and fraud and have vested interests.Mind you I ignored all their tips I have stated on moneylife but the time has come to ban abnd blacklist them.Nilesh you seem to have vested interests in putting words in my mouth to protect HDFC Banks name in every which way.Smell the coffee-none of the raders need cheats like HDFC Sec.All one needs is moneylife.

Moneylife doesnot need to save me-you need to save HDFC Bank as all their fake "forced" tips are on my tape all which I have ignored.You need to save their reputation,donot worry about me and moneylife which is the most credible publication in India.

Suketu
Suiketu Shah
10 years ago
Another point I wl like to advise readers is that HDFC Bank almost forces you to buy the shares which they recommend.Thsi starts from the top ie their VK Sharma,etc.If you donot buy the shares they recommend (like Nifty bees etc which they suggest for unterior motives and ONGC buying call now as per their Imperial magazine when everywhere its a sell call) they get very angry and behave very nastily and rude with you.

Another important point I would like to highlight of HDFC Bank that one of their directors Amit Kapadia was boastign to us how very often he goes to Goa to "invest in a popular casino there.We al know casino is baeed on cash money.How do "directors' getting paid 1 lakh/month have so much "cash money".The answer "lies within".Stay far far away from HDFC Bamk and HDFC Securities in every which way.They wl force you to buy shares when its a sell call for ulterior motives.
Krishnan
10 years ago
Kudos to the relentless efforts, which have now borne fruit.
nagesh kini
10 years ago
I've personally known of two - one a highly qualified company executive well versed in corporate laws and an extremely knowledgeable SME entrepreneur who were conned into the PMS and ended up in landing in the red to the extent of multiples of lakhs. Both in good faith handed over their entire blue chip portfolios on the promise that they would churn them to get "the best returns" only to find the manager who promised no longer there to answer at the end of the year with annual losses and no profits.
We as a family have firmly turned PMS of any kind, preferring to take professional advice on the markets and our selves taking the buy and sell calls on only on blue dividend and bonus issues and not indulge in day trading. It has been working fine for quite sometime. Sorry No-No PMS!
Vinay Joshi
10 years ago
Hello Ms.Sucheta,

Congrats! So you were talking about HNI-PMS!

Why do they assign a 'blank' power of attorney? While investing do they consult anyone?

Well with a foreign bank i had similar issue [during 2008 meltdown]but no losses.

There are several deceptive promotions but no one reads the fine print about PMS.

One again i appreciate & applaud you for the efforts initiated. Also thank Mr.Gaurang Damani.

Regards,
Suiketu Shah
10 years ago
I fondly recall the good advise moneylife gave me when I spoke to them on a similiar matter in Feb 2012.Pl donot donot donot donot donot donot donot ever use HDFC Bank Investment Banking(aka Private banking) division in Lower Parel.They are most untrusthworthy,unreliable and only out to swindle money of "gullible" investors who get fooled by their smart talk.

The management also takes the side of their employees leaving the investors stranded.Pl also note the reputation of people who work in HDFC Bank is not what is used to be 10 yrs ago.This coming from a 13 yr old customer.Pl beware big big big time of HDFC Bank also.
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