BSE IPO disclosures incomplete, says investor body

Midas Touch Investors Association writes to Sebi, merchant bankers

Midas Touch Investors Association has written to the market regulator and the merchant bankers of BSE's upcoming IPO saying a pending litigation has not been disclosed in the IPO documents.

In the letter , the association led by Noida-based Virender Jain has stated that certain important and material facts have been concealed and not-disclosed in the prospectus.

"Under "Outstanding Litigation" the Writ Petition filed by us (Midas Touch Investors Association) has not been disclosed and "Risk Factors" arising out of this writ petition like penalties, fines, suspension of BSE licence or third-party lawsuits and prosecution of officials and executives etc. have also not been disclosed," the association said in a statement.

The public interest litigation has been filed on the grounds that stock exchanges and particularly BSE and NSE failed to regulate companies listed with them, they did not take any action for over eight years for non-compliance of listing agreement terms and SEBI as their regulator also did not take any penal action either against the companies or exchanges.

In response to an email seeking comments, BSE said, "As mentioned in your email, BSE Limited is currently in the process of undertaking its initial public offering and, as a result, is subjected to various restrictions from a publicity perspective. That having been said, we would like to reiterate that the disclosures included in red herring prospectus dated January 11, 2017, filed by BSE Limited, complies with the applicable legal requirements."

Midas argued in the petition that inaction of the bourses cannot be viewed as an act of mere omission, and rather, it is deliberate, and, wilful neglect, year after year. "This points to an unholy nexus between unscrupulous corporate, stock exchanges and SEBI enabling loot of investors by predatory management without any fear of law."

The Midas PIL stated that small investors are the biggest losers due to such inaction. "Resultantly, their estimated investment of over rupees one lakh crore has been blocked and is in suspended animation for years. The number of affected small investors may be one crore. They have lost heavily and withdrawn from the securities market, severely affecting raising of money by companies for speedier development of the economy," it said.

The PIL filed in 2012 is pending before the Delhi High Court.