Big Bang Reforms: What about regulation & supervision?
August 22, 2012
SEBI has announced a series of reforms to revive investor confidence and make IPOs attractive again, but what has it done to resolve investors’ grievances?
The Securities & Exchange Board of India (SEBI) announced a series of reforms that it hopes will revive retail investor confidence and make IPOs attractive again. But what do you do when cases like these, continue to be highlighted by investors on a daily basis?
VR Mathur Mass Communications went public in 1993-94 at the height of the IPO mania. Even then, it barely managed full subscription. The promoters were arrested and tried for manipulation of the IPO, mis-statements in the prospectus and inducing people to subscribe. Seven sets of regulatory actions were initiated against VR Mathur and other directors, including criminal prosecution; Vimal Mathur and Sunitee Mathur were convicted. But the offence was ‘compounded’ by the Company Law Board and they eventually got off with a paltry payment of Rs45,000. Meanwhile, the company was compulsorily de-listed from the BSE and Mr Mathur was debarred from the capital market until 2007.
Did it stop the company and the promoter? Well, what are friendly exchanges and the market regulator there for? The company changed its name to Gradiente Infotainment Limited, and is re-listed on the BSE. Its website lists Vimal Raj Mathur, the managing director, as a renowned and respected professional. Sunitee Raj Mathur is a director again, while the other three board members are new. While the share is actively quoted just above Rs10, BSE’s website has absolutely no information on the company, its history, annual reports, bonus or anything. An investor, who knew about it, filed a complaint with SEBI under its much-touted grievance redressal system called SCORES. All he received is an automated acknowledgement number. We wrote to SEBI, the BSE and the government of India and also drew a blank. Isn’t it ironical that SEBI has announced a series of measures to revive investor confidence by tinkering with IPO and mutual fund regulations? The one thing that will truly revive investor confidence would be an investigation into how this company was re-listed, who permitted it and why BSE’s website carries no information on its dubious past, when www.watchoutinvestors.com has the entire history.