Hc Seeks Sebi Reply Over Plaint By Investor

The Delhi High Court has sought replies from the Securities and Exchange Board of India (Sebi) and the finance ministry on an investor's plea that the regulator was not discharging its duties to protect investors' interest.

Justice C M Nayar issued notice to the respondents asking them to file their replies by September 19 on a petition by Vijay Kapoor alleging that due to negligence on the part of Sebi in performing its statutory powers investors were suffering monetary loss while dealing with securities.

Counsel for the petitioner, Anup Bhambani, told the court that due to the actions and omissions on the part of Sebi, investors have lost faith in the operation of stock exchanges, companies and the intermediaries in the country.

 

The petitioner said government vested Sebi with statutory powers by the Sebi Act, 1992, to monitor the activities of stock exchanges, mutual funds, merchant bankers, brokers and other intermediaries to promote orderly and healthy growth of the securities market as well as for protection of investors.

Kapoor has sought a direction from the court to Sebi to look into specific problems cited in the petition common to millions of investors in the country, who suffer in various ways at the hands of stock-brokers, other intermediaries, stock exchanges and companies while dealing in stocks and shares.

The petitioner said brokers, sub-brokers and other intermediaries habitually violate code of conduct by not promptly processing, completing transactions undertaken on behalf of their clients and by not making prompt payments for shares sold and by timely delivering shares purchased.

He said no action was ordinarily taken by concerned stock exchanges and Sebi even after complaint against the defaulters and the common investors were left with no remedy for the loss, expense, risk and harassment inflicted upon him.

Citing his personal experience in buying fake shares, the petitioner said no action has been taken by Sebi in regard to stop recent sudden spurt in the circulation of number of fake/forged shares in the stock markets

Kapoor said in his petition that due to the failure of Sebi to perform its statutory duties there was at present a veritable chaos in the dealings on the stock markets of the country.

For this reason, the petitioner said, investors, especially small and non-professional ones, were suffering heavy losses and they did not have the knowledge to protect themselves against fraudulent and illegal practices prevalent in the stock markets due to some unscrupulous brokers and other intermediaries.