The Securities and Exchange Board of India is perhaps the most important regulatory body. Similar to the Securities Exchange Commission in the US, it is the authority that has to always be on its toes. More so, when the markets are doing well and there are a spate of IPOs (initial public offerings) or FPOs (follow-on public offerings) like now.
Its main mandate is to protect the interest of investors in the securities markets and to promote the development of and to regulate the securities markets so as to establish a dynamic and efficient securities market.
When investors have complaints against listed companies or registered intermediaries, SEBI acts as the nodal agency for addressing these complaints, if they are not solved directly between the parties concerned, or if the investor is not happy with the response.
SEBI has listed certain categories of grievances for which investors can file complaints with it. These include:
- Non-receipt of refund order or allotment advice in case of investment in IPO's, FPO's and rights issues
- Non-receipt of dividend from listed companies
- Non-receipt of share certificates after transfer from listed companies
- Non-receipt of debentures after transfer or non-receipt of interest or principal on redemption and non-receipt of interest on delayed repayment
- Non-receipt of rights offer letter
Collective investment schemes like plantation companies. Investors can send complaints to SEBI regarding non-receipt of invested principal and returns there from.
Mutual funds/venture capital funds/foreign venture capital investors/foreign institutional investors/portfolio managers/custodians - Complaints mutual funds like non-receipt or delay in receipt of dividends/redemptions, non-availability of portfolio disclosures, non-receipt of transaction statement, etc.
Brokers - This is the most common area of complaints for the average investor. Complaints against brokers stem from disputes over brokerage rates, non-receipt of purchased shares or payments for sold shares, auction of shares sold and delivered timely, but delay at broker's end, etc.
Complaints against securities lending intermediaries may arise due to non-receipt of shares lent by the investor or interest thereupon, or non-receipt of funds upon return of borrowed shares or excessive interest charged upon borrowing.
Complaints against merchant bankers, registrar and transfer agents, bankers to issues and underwriters generally stem from problems in primary market issues, like non-disclosures, service issues etc.
Complaints against securities exchanges, clearing or settlement houses or depositories - these concern irregularities or failure to act diligently, like the Calcutta Stock Exchange in the last securities scam or the NSDL in the recent IPO scam.
Derivative trading - Many investors sign legal papers empowering the broker to trade on their behalf, without proper knowledge and wake up on seeing their margin money eroded due to sustained losses.
In other instances, major complaints are against brokers squaring off outstanding derivatives positions due to lack of margins or not giving the client adequate time or notice, leading to huge losses for investors/traders. These happen especially when markets turn volatile of see sustained and large one- way movements.
There are other areas such as corporate governance, corporate restructuring, acquisitions, buybacks, delisting and other compliance related issues for which one could approach SEBI. For all this one can
- File complaints electronically on the SEBI website
- Get a complaint registration number
- Track the status of the complaint online
- SEBI looks into the merit of the complaint and takes up the matter with the concerned company or intermediary
It can also direct intermediaries to redress the investor complaints satisfactorily if the case merits such an order One can also send grievances by post or fax.
In other words, there is a wide range of issues that come under the jurisdiction of SEBI. And the onus is entirely on it to keep the stocks markets healthy.
The writer is director of Touchstone Wealth Planners.
