Investor Interest   Exclusive
SEBI misrepresents public information on PMS as fiduciary; offers mindless response to simple RTI query

A simple query to SEBI about aggregate list of assets under management was stymied as being fiduciary in nature, when parts of that information are already available in public domain. It shows SEBI’s intention to stall, rather than share information, with the public

In response to a RTI (Right to Information) application seeking information about notorious portfolio management services (PMS) of banks and brokers, market regulator Securities and Exchange Board of India (SEBI) has responded in a manner that defies logic. It has refused to disclose information on the quantum of Assets under Management (AUM) of each PMS, citing “fiduciary reasons”. Ironically, even as SEBI is busy doing this stalling act under its own rules for PMS, each PMS provider has to provide this information. All the RTI application was seeking this information in aggregate so that comparison and analysis is easier. SEBI ought to have it and share it. Certainly, saying that is fiduciary in nature is a lie. Once again it shows SEBI’s anti-consumer attitude.

An RTI was filed by an investor to seek information to find out which were the largest PMS, the best performing PMS, and so on. When shared with the larger public this information would be beneficial for the general public. However, SEBI regards this kind of information as a “fiduciary” breach, and therefore the public is not entitled to it.

According to the reply to the RTI, dated 24 February 2012, it said: “Please note that SEBI maintains data regarding AUM of each PMS in fiduciary capacity and the same is exempt from disclosure under Section 8(1)(e) of the RTI Act, 2005.“

The irony is that the same information is put up in public domain, for all to see. Where’s the question of fiduciary breach? For example, you can check HSBCand ICICI below:
 



It is pertinent to note that every portfolio manager is required to disclose to SEBI, as well as to the public, critical information pertaining to PMS schemes on its website. SEBI, vide its circular IMD/DF/16/2010 dated 2 November 2010, it clearly stated, “To ensure compliance with regulation 14(2)(b)(iv) of SEBI (Portfolio Managers) Regulations, 1993, Portfolio Managers shall disclose the performance of portfolios grouped by investment category for the past three years as per the enclosed prescribed tabular format. Portfolio Managers shall also ensure that the disclosure document is given to all clients along with the account opening form at least two days in advance of signing of the agreement. In order to ensure that the clients have access to updated information about the portfolio manager, portfolio managers shall place the latest disclosure document on their website, wherever possible.” (emphasis ours)

Having said this, how would a potential customer or investor decide which PMS to invest? For this, the investor needs to compare and contrast the performance of all available PMS schemes, across categories; namely discretionary, non-discretionary and advisory services. Since the kind of information sought is not readily available anywhere, the only option for the investor is to jump from one website to another, or make calls to relationship managers who tend to window-dress the numbers. Considering that the minimum investment for PMS is now Rs25 lakh, it is not a small amount of money; it is high stakes and serious business, which requires equally serious research.

We found out that SEBI has published only consolidated figures which are currently available on the market regulator’s website for all investors to see. If one peeks into the details, it doesn’t offer much value to the discerning investor. An investor would be interested in comparing and contrasting each and every PMS scheme, the same way as one would do for mutual funds and insurance. However, SEBI has made it only more difficult for investors to obtain publicly available information, for reasons that defy logic. If RTI is not the recourse for obtaining cohesive and complete set of data, then one can expect to spend countless hours, or for that matter days, trying to fetch publicly available information, thus making lives of investors miserable, thanks to SEBI.

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    COMMENTS

    Dayananda Kamath k

    8 years ago

    because they are the bread and butter for sebi.they need investor complaints so that they can flees them at their whims and fancy.sebi itself does not follow its rules. best case is nissan copper issue the brokers andsebi barred the purchaser from selling the stock by not giving creedit of the purchased share for 15 days and by then it has become a less than penny stock. for non delivery of shares there is auction rule. but here purchaser were made to suffer. if any other country chairman sebi would have been put behind bars for such acts.

    sachchidanand

    8 years ago

    I have had a similar experience. Having been a victim of "Vanished Companies" post IPO's between 1990 to 2000 , I sought consolidated information under RTI querry on Merchant Bankers of such Vanished Companies , so that Investors can avoid being taken for another ride . I was denied the information under the pretext that I will have to collect it myself from RHP's filed on SEBI web site! In another RTI querry, I wanted to know which Brokers are accused of Unauthorised trading by clients and how many cases are pending for Arbitration . This too was stonewalled under the same excuse of "Information being fiduciary ". This is cock & bull story. SEBI is unfortunately indulging in protecting unscrupulous Merchant bankers , Portfolio managers & Brokers, contrary to its charter .

    pawan agrawal

    8 years ago

    sebi is working against the interest of investors

    sebi always supports wrong doer brokers and companies

    Nagesh Kini FCA

    9 years ago

    SEBI Appealate Authority has to satisfy us what exactly they understand by the use of the term 'fiduciary'. It may be term picked up some babu from some Wall Street journal. He has just thrown this to push the query away!

    dayananda kamath k

    9 years ago

    today regulators are the biggest manipulators. it is nice way to reply irrelevently to the quiries so that you will not again bother. when i wrote about fudging of accounts to corporate affairs ministry with subject as a satyam in bank. the under secretary treated it as claim from investor fund and informs me that there is no provision for refund. when i clarified the issue in my subsiquent letter. he had the audacity to send the same reply with new reference number. i wrote to the then minister for corporate affairs and again to veerappa moily about the insident and recover the entire salary paid to him till date as he is illiterate person sitting in such a high position .but no action till date.

    REPLY

    P M Ravindran

    In Reply to dayananda kamath k 9 years ago

    This is the usual experience of citizens dealing with babus of all types- LDC, UDC or IAS- whether in the bureaucracy or judiciary!

    P M Ravindran

    9 years ago

    When the ultimate authority on law- the CJI- resorts to such anti-transparency, anti-people and anti-national activities, why blame other lesser mortals. Worse, look at how KG Balakrishnan was rewarded for his subversion of the transparency law, by those whom we have empowered and pampered, to enact just laws and enforce them without fear or favour!

    Dr Vaibhav G Dhoka

    9 years ago

    After initial years of its formation with first Chairman Ramkrishnan SEBI is and was mute to investors grievance.It swiftly changed its PREAMBLE instead of Investors interest it started caring for brokers from whom they receive hefty cuts.GOD save Indian investors.

    REPLY

    Sanjay

    In Reply to Dr Vaibhav G Dhoka 9 years ago

    But Bhave was media's hero for his pro-investor actions.

    krish

    9 years ago

    SEBI NEEDS TO DO AN ENCYCLOPEDIA OF THINGS, BUT THEY DONT! THEY ARE NOT EVEN BOTHERED.
    THEY DONT EVEN HAVE A SYSTEM OF ANYBODY REPORTING ANY ISSUE & GETTING REDRESSED PRO-ACTIVELY

    R Balakrishnan

    9 years ago

    I wonder if someone could prosecute the SEBI Board on this issue. Absolute arrogance and devil may care. This is reflected in their treatment of investors, whom they are supposed to take care of, if not protect. With a regulator like this, we investors do not need any enemies. Shut down SEBI. We can live without SEBI. In any case, their being around is simply superficial and useless. Without them, we would be forced to be on our guards and protect ourselves better.

    Sharad

    9 years ago

    This is absolutely shocking. The PIO should be fined. Please file an appeal

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