Swift move

Many agitated consumers also wrote to the RBI which had sought public comment. Interestingly, without even waiting for the May 15 deadline for accepting public comments, the RBI reacted swiftly to announce that it “has decided not to accept the Study Group’s recommendation of levying a charge for paper based transactions”. It also pointed out that it “had not accepted similar suggestions received twice in the past” and clarified that any recommendations by a study group — internal or external —- do not reflect the views of the RBI.

RTI and bourses

Many activists strongly reject the Finance Ministry’s stand that stock exchanges are outside the purview of the Right to Information (RTI) since they are supervised by the market regulator. Information seekers, however, find that stock exchanges are selectively willing to part with information but sometimes refuse to disclose what ought to be public.

Sachchidanand Paradkar, an investor activist from Nasik, has interesting experiences in this regard. He had sought data on specific disputes referred to stock exchanges between April 2004 and 2006 regarding the Misuse of Power of Attorney by brokers, Unauthorised Trades by Brokers, Non-Receipts of Sale Proceeds from brokers and Misuse of Depository Accounts by brokers. This information ought to be in the public domain at least to warn investors about certain brokers, but Paradkar was told that the information “is not available”.

The two national stock exchanges told him that details of disputes relating to investor grievances were time-barred, but he did get brief details of disputes referred to arbitration based on complaints filed by investors. There were 173 such arbitrations filed with the BSE and 367 with the NSE. Further, 59 arbitration awards at the BSE favoured investors and 125 went in their favour at the National Stock Exchange.

In response to another query, Paradkar was told that Sebi had not scrutinised Member Client Agreements by large brokerage houses even though there are innumerable complaints and media reports about one-sided terms and clauses. This is interesting, because investor associations have been pressing Sebi to vet such agreements for well over a year, but the regulator has failed to respond. Interestingly, the appellate authority rejected several of Paradkar’s appeals on the grounds that it would violate commercial confidentiality.

... contd.