Market regulator Securities and Exchange Board of India (SEBI) said the Justice RM Lodha Committee appointed by the Supreme Court has decided to pay total outstanding principal amount of Rs2,500 to investors of PACL Ltd (erstwhile Pearls) after selling some properties of PACL.

"It is clarified that refund may not necessarily be Rs2,500 per claimant investor, and would be effected on a pro-rata basis after considering the number of claims received as well as the funds available with the Committee," SEBI said in a release.

Earlier on 27 November 2016, the market regulator, while informing the process to claim refund (for investors of PACL) made it clear that the Committee would initiate refund process only upon realisation of a sizable amount. It had said, "In such case, investors would be required to file their claims only in the prescribed format upon specific notification by the Committee. Till such notification, investors are requested to retain their documents with themselves and not to part with them for any reason whatsoever."
 
The Lodha Committee is supervising the Supreme Court ordered process of selling PACL's assets across the country and refunding Rs49,100 crore collected from over 56 crore investors. The money to be refunded to the investors was allegedly collected by PACL and Pearls Golden Forest Limited - two companies belonging to Nirmal Singh Bhangoo-managed group - in the name of sale and development of agricultural land.

 

Investors whose total outstanding amount (Principal) with PACL is up to Rs2,500 (per investor) are advised to send the following details by way of an SMS at 562632 or by uploading the same on the website http://sebicommitteepaclrefund.com/ for receiving refund of money invested:

 

▪ Name of the investor as per PACL Certificate, 

▪ Amount claimed (in rupees), 

▪ Claimant’s mobile number,

▪ PACL Scheme Payment Registration number,

▪ Scanned copy of PACL Certificate,

▪ Aadhaar/ Pan Number,

▪ Bank account number and IFSC code,

▪ Whether land has been allotted to the claimant investor by PACL,

▪ Scanned copy of PAN Card / Aadhaar Card, and

▪ Scanned copy of the latest Bank Statement showing the last three transactions.

 

The applicants should ensure that the latest Bank Statement uploaded clearly shows the name, address, bank account number and IFSC code, according to a release from SEBI (Securities and Exchange Board of India).

 

In this respect, a demo video illustrating the process for making an application for refund is provided on the website http://sebicommitteepaclrefund.com/  and the same may be viewed before making the status of their applications for refund. Investors can also call on <044-395-71985>.

 

The investors are further cautioned against parting with their original PACL Registration Certificates, unless on specific intimation received from the Committee. The last date for receipt of applications for refund is 28 February 2018.

 

We tried seeking help from SEBI so that we can help investors who want to file refund claims offline, but there is no response from the market regulator. This means, all those who are seeking refund, need to file claims on their own on the website http://sebicommitteepaclrefund.com/.

 

PACL investors to take out morcha to SEBI next month to submit claims

 

PACL Scam: SEBI asks investors not to handover documents, receipt to anyone

 

PACL group chairman Nirmal Singh Bhangoo, three others arrested

 

Market regulator Securities and Exchange Board of India (SEBI) on Thursday decided to allow all stock exchanges to trade in stocks and commodities from October 2018 in two phases. This will allow BSE and National Stock Exchange (NSE) to offer commodity products on their platform.

 

Ajay Tyagi, Chairman of SEBI, said, "Phase 1 will cover integration at intermediary level. In Phase 2, necessary steps would be taken to enable a single exchange to operate various segments such as equity, equity derivatives, commodity derivatives, currency derivatives, interest rate futures and debt. To permit trading of commodity derivatives and other segments of securities market on single exchange, the Board approved proposal to remove restrictions by making suitable amendments to Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporation) Regulations 2012, which will be effective from 1 October 2018".

 

Responding to a specific query on SEBI not placing Regulations or Amendments before the Parliament, Mr Tyagi admitted an 'oversight' especially while placing the SEBI (Prohibition of Insider Trading) Regulations, 2015. He, however, said that SEBI had already forwarded the Regulations, passed by its Board in 2015, to the Ministry of Finance for placing it before the Parliament. "We have also asked our Legal Department to carry out monthly review on all Regulations and Amendments that have not placed during the Parliamentary session," he said.   

 

SEBI also tweaked norms on mutual funds to avoid conflict of interest. Accordingly, sponsor of one mutual fund cannot have 10% or more shareholding and representation on the Board of another mutual fund house, the SEBI Chairman said.

 

While accepting that there is a need to prevent the conflict of interest between advising for investing in financial products and selling of financial products, the SEBI Board decided to have a consultation paper and seek comment from public.  The Consultation Paper will have proposals, one on clear segregation between two activities like providing investment advice and distribution of the investment products/ execution of investment transactions. The second proposal seeks to make mutual fund distributor to explain features of the product and ensure principle of appropriateness of product while distributing MF products to clients.

 

The SEBI Board also approved new norms for credit rating agencies. This includes, increase in minimum net worth to Rs25 crore from Rs5 crore, and mandating 26% minimum stake for promoter of rating agency for three years. SEBI also put restrictions on crossholdings amongst credit rating agencies. Accordingly, no credit rating agency can directly or indirectly hold 10% or more stake or voting rights in another credit rating agency. This also means one credit rating agency cannot have a representation on the Board of other credit rating agency.

 

Credit rating agencies are also asked by SEBI to segregate their activities other than rating of financial instruments and economic or financial research to a separate legal entity.

 

Talking about Real Estate Investment Trusts (REITs), Mr Tyagi said, SEBI is trying to simplify and rationalise norms for this. As per new changes, REITs would be allowed to invest at least 50% state in holding company or special purpose vehicle (SPV). Similarly, the holding company would be allowed to invest at least 50% stake in SPV, while keeping REITs ultimate holding interest at 26% in the SPV.

Market regulator Securities and Exchange Board of India (SEBI) is holding a board meeting on Thursday, which is laden with 17 items on the agenda. One of the most important ones from the point of view of savers and investors is to approve changes in the guidelines that segregate distribution and advisory services of financial products strictly. What this means is that the regulator wants financial product distributors not to advise. If they want to advise, they need to set up a separate business. This is not the first time SEBI made this announcement, but distributors continued advising their products due to unclear regulations, poor supervision and lax governance. A few months back SEBI put out a consultation paper, which argued for a strict segregation of advisory and distribution.

 

There are good reasons, as to why distributors should not take the role of ‘advising’ investment products. This leads to conflicts of interest between the two parties due to higher commissions earned on certain products over others. For instance, closed-ended funds attract higher commission over open-ended mutual funds; equity funds command more commission than liquid or debt funds. Sectoral funds are pitched as sure-fire winners because of the distributor’s ‘forecasting’ skills. SEBI’s rule specific that for Registered Investment Advisor (RIA) should,  

 

1. Act in a fiduciary capacity towards its clients and shall disclose all conflicts of interest

2. Not receive any consideration/remuneration/compensation from any other person than the client for the underlying advice provided.

3. Maintain arms-length relationship between its advisory activities and other activities (which is distribution).

4. Disclose to the client any consideration/remuneration/compensation received or receivable by it or any of its associates/subsidiaries for any distribution or execution services in respect of the products or securities for which the investment advice is provided and

5. Disclose any actual/potential conflict of interest arising from connection with any issuer of products, including material information that might compromise its objective of carrying on the investment advisory services.

 

What the distributors argue is-

 

1. Is the Indian investor ready to pay fees for investment advice?

2. Will investors feel cheated having to pay fees for advice and also pay indirect commissions to the distributor, where both are operated at arms-length distance?

3. Will the segregation of distribution and advisory role guarantee that the earlier prevailing conflict of interest is actually stopped?

 

The market regulator has been evaluating global practices in the advisory business and finding ways to implement a similar strategy back home. Regulations of various jurisdictions across the globe and the impact of such a shift are being studied by the regulator. 

 

On a different note, Association of Mutual Funds in India (AMFI), the mutual fund industry body, also took a jab from SEBI after the regulator asked AMFI to tone down its hugely successful ad campaign carrying the slogan ‘Mutual Funds Sahi Hai’.  The securities market regulator is concerned that the ads could persuade investors into buying mutual fund (MF) products without understanding the risks associated with them.