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With reference to the editorial, “Sebi jumps the gun” (August 10), there is no doubt about the intention of the Securities and Exchange Board of India. It has directed stock exchanges to initiate action against 331 companies, which are suspected to be shell companies. But Sebi’s move will lead to panic among investors, both retail and institutional, who own shares of these companies.
When a company has extensive operations, it need not be subjected to such treatment without notice. It is good to be cautious but being overly concerned and causing hassles for investors are not by any means desirable. The investors should have been told why they would be barred from trading in these companies and for what fault of theirs.
Sebi should have acted more maturely and with pragmatism to ensure investors did not feel cheated. Cleaning up the system at the cost of minority shareholders is not justified; it will keep retail investors away from the market.
I agree with the editorial that the accused should have been given a chance to defend themselves. Sebi, being a regulator, acted with high-handedness.
Bal Govind Noida
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