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

Like this story? Get our top stories by email.

User

COMMENTS

Vinay Joshi

6 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

6 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,


REPLY

Sucheta Dalal

In Reply to Vinay Joshi 6 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

In Reply to Sucheta Dalal 6 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

6 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

REPLY

Nilesh KAMERKAR

In Reply to Suiketu Shah 6 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

In Reply to Nilesh KAMERKAR 6 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

In Reply to Suiketu Shah 6 years ago


Mr. Suketu Shah,

I have nothing more to add.











Suiketu Shah

In Reply to Nilesh KAMERKAR 6 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

6 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

6 years ago

Kudos to the relentless efforts, which have now borne fruit.

nagesh kini

6 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

6 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

6 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.

Annual confidential reports of all IAS officers gutted in Mantralaya fire

The annual appraisal reports of all IAS officers in Maharashtra are lost in the Mantralaya fire, claims the state government in an RTI reply

In an RTI (Right to Information) response to former Central Information Commissioner Shailesh Gandhi, the Maharashtra government has said that annual confidential reports (ACRs) of all 280 IAS, IPS officers were gutted in the Mantralaya inferno on 21st June last year.

 

“The fire on 21 June 2012 gutted the General Administration Department’s (GAD) office number 10, which had all original annual confidential reports and confidential reports of officers from the Indian Administrative Service (IAS). Therefore, we cannot provide the information sought by you for past two and more years,” the Public Information Officer (PIO) of GAD stated in his reply.

 

At present there are 280 IAS officers working in Maharashtra, out of which the government has initiated the performance appraisal for 259 officers. The assessment report of the rest 21 IAS officers is also being prepared, the PIO informed.

 

The PIO also clarified that since 27 IAS officers are working on a deputation out of the state, it cannot provide their appraisal reports.

 

Maharashtra chief minister Prithviraj Chavan had told reporters that 2.25 lakh files had been digitalised and 3.18 crore papers had been scanned prior to the incident. This means the rest about 4.82 crore pages were not digitised and were susceptible. 

 

Mr Gandhi, sought information about the receipt of annual confidential reports of IAS officers in the state, for each of the last two years in the following format…

 

Total Number of IAS officers

Number of officers for whom ACRs/APRs have been received for the relevant year

Number of officers for whom ACRs/APRs have been not received for the relevant year

Number of officers for whom ACRs/APRs have not been received for two earlier  years

Number of officers for whom ACRs /APRs have not been received for three earlier years and more

2010-2011

 

 

 

 

2011-2012

 

 

 

 

 

Here is the reply given by the PIO (in Marathi)...

 

 

Like this story? Get our top stories by email.

User

COMMENTS

M G WARRIER

6 years ago

Modern offices are designed to work with less paper and fire hazards are created by accumulating old records and papers which are expected to be weeded out and destroyed at reasonable intervals. I remember a news report about former FM getting a huge quantity of 'Xerox' copies of agena/notes etc of all meetings he attended, just before he vacated office to become President.That prompted me to send this piece to Reader's Digest. I am not aware whether they published it!
@Work
All in a day’s work

Shredding machines and back-up files

“Shredders in North Block get busy as FM set to leave: For the last two days, the paper guzzlers have been working overtime in FM’s Office. In fact the scale at which papers are being destroyed has even prompted the 50-man strong ministerial staff- who work in two shifts-to borrow shredding machines from across the ministry. One explanation for the humongous pile of papers is the fact that Pranab Mukherjee presides over multiple GoMS (Groups of Ministers)-ranging from 2G spectrum to food and oil. These papers, which are usually photocopied to ensure that there are back-ups, would not be required in Rashtrapati Bhavan.”(Report in media on June 21, 2012).
This reminds me of one incident in the office I worked in late 1960’s. The officer-in-Charge visited the record room one day and found that there was no room for keeping new records as old records had not been weeded out and destroyed. He gave on-the-spot instructions to attend to destruction of obsolete files and keep only important old files and recent records which are not due for destruction in the record room. Within a week, a note was submitted to him for passing orders for destruction of a large number of files and documents which satisfied the norms for destruction. His orders on the file read something like this:
“Destroy all the files listed for destruction. Some files have become too old and clumsy to handle. Now that we have acquired a new Xerox machine which is fast and efficient, please keep copies of all the files being destroyed.”
Hopefully, North Block would have now taken advantage of the new technology available and preserved images of all the ‘back-up files’ on electronic chips before shredding!
M G Warrier, Mumbai

Shadi Katyal

6 years ago

One doesnot hear any fires in oither nations but in India in this age of digital recording.
Nice way to desgtrioy records. This is the way India

nagesh kini

6 years ago

I had thought the Mantralaya fire devoured only Adarsh files!
More skeletons are sure to pop up!

Ramesh Iyer

6 years ago

Seems GAD of Govt of Maharashtra hasn't heard of scanners !! Moreover, officers of All India Services like IAS, IPS, & IFS are governed by Central Govt enacted rules, so guess a copy must be there with the UPSC or the Dept of Personnel under PMO currently.

REPLY

M G WARRIER

In Reply to Ramesh Iyer 6 years ago

The reply quoted in he article is a typical 'RTI-specific' response.In all probability, as you(Ramesh Iyer) rightly presumed, earlier records will be with other offices and essential records must have been re-constructed or may be in the process of restoration, as these form the basis for deciding posting/promotion and so on. This is possibly an easy diversion taken by the government.

RTI workshop: Use specific orders of the CIC to file an effective RTI application, says Shailesh Gandhi

Moneylife Foundation completes 150 events with a workshop on RTI for advanced users conducted by former chief information commissioner, Shailesh Gandhi. Mr Gandhi discussed various case studies during the session

In just under three years, Moneylife Foundation reached yet another milestone, this time of completing 150 events. Over this time-frame the Foundation has covered events on various topics in personal finance and public interest to empower its members. “How to Effectively Use the Right to Information Act” is just one of them. Mr Shailesh Gandhi, former Central Information Commissioner (CIC), over the last three months, conducted workshops for beginners and as well as advanced users of the RTI. This was the final session for advanced users. Based on feedback from participants, Mr Gandhi focussed on specific case studies to discuss what has been done so far and the way forward.
 

Click here for the RTI Judgement Series
 

Mr Gandhi explained common apprehensions of the provisions under the RTI Act prevalent among the participants as well as information officers and offered interesting viewpoints and suggestions as well as opinions and clues on how to pursue the case in the appeal process and minimize delays in obtaining relevant information.
 

The session was replete with plenty of interesting anecdotes and examples from his vast experience as the Central Information Commissioner and as an activist. He also urged the participants to use previous specific orders of the Central Information Commission (CIC) as potential reference points to enable activists argue their case effectively. Mr Gandhi took the participants through the list of important judgements on the RTI, which are also published on the Moneylife website.
 

The provisions of RTI are contained in Section 8(1), which Mr Gandhi devoted much of the session time. It is the contents of this Section that one’s RTI query can be refused. He also gave several examples of how PIOs refuse RTI queries. The most common excuse by information officers for arbitrarily refusing information is that they hold it in a fiduciary capacity. He advised participants to go through the Central Information Commissioner Judgement (CIC/SG/A/2012/000857/19484) in order to get the background of a case where fiduciary relationship refusal was overturned in favour of the appellant.
 

Mr Gandhi pointed out that “information which would impede the process of investigation or apprehension or prosecution of offenders” can be refused. The keyword here is ‘impede’ and most PIOs misuse this word. If an RTI query is turned down based on this ground, the PIO must give the reason how and why it impedes an investigation.
 

Mr Gandhi mentioned that filing a second appeal is a long-drawn out process and will take as much as two years. He advised participants to maintain a repository of all the RTI queries, appeals in an orderly fashion so that they can easily refer to it and retrieve information.
 

If you’d like to empower yourself, do join Moneylife Foundation for free. It costs nothing and you will be part of one of the fastest growing communities in India. Click here to join Moneylife Foundation and get a free e-book, if you haven’t already

Like this story? Get our top stories by email.

User

COMMENTS

SUJIT KATYAL

6 years ago

i agree with manoj.

Manoj Dhyani

6 years ago

As commented by former CIC Mr Shailesh Gandhi in the organized seminar that the process of making a 2nd appeal on RTI may take two years of time; my question is doesn't it counts some kind of hypocrisy on the right of an individual who is in want of the information immediately. The cumbersomne delaying tactics on the parts of the officials of the Govt hand-in-globe with some very officials responsible to see that the provisions of the Act are duly delivered, actually is making the whole system laughable. We must find the ways and means by which an RTI application is addressed at the earliest.

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

online financial advisory
Pathbreakers
Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
online financia advisory
The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
financial magazines online
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
financial magazines in india
MAS: Complete Online Financial Advisory
(Includes Moneylife Online Magazine)