GOVERNMENT OF INDIA
Ministry of Finance
DEPARTMENT OF ECONOMIC AFFAIRS
UNSTARRED QUESTION NO. 3014
TO BE ANSWERED ON THURSDAY, THE 20th December 2012/
AGRAHAYANA 29, 1934 (SAKA)
Mishandling of investor’s stocks
3014: Shri Rajeev Chandrasekhar
Will the Minister of FINANCE be pleased to state:
(a) Whether Government is aware that there have been incidents of investors’ stock being mishandled and/or allegedly liquidated by brokers, purely based on a forged Power of Attorney (PoA);
(b) Whether many of these duped investors have approached SEBI and requested its intervention in such cases, but SEBI has been unable to effectively and promptly address these complaints; and
(c) If so, the steps that Government has taken to ensure that SEBI uphold its primary responsibility of protection of investor interest?
THE MINISTER OF STATE FOR FINANCE
(SHRI NAMO NARAIN MEENA)
(a) & (b): The Securities and Exchange Board of India (SEBI) has framed a grievance redressal system with a view to handling complaints from investors in the capital markets.
SEBI has informed that it has a system of categorizing the complaints received from investors against stock brokers on 26 parameters. These parameters have been decided based on complaints generally received by SEBI. Complaints of forged Power of Attorney (POA) do not fall in any of these 26 Parameters. Thus, SEBI does not have data about the number of incident where investors’ stocks were mishandled and/or allegedly liquidated by brokers, purely based on a forged Power on Attorney (POA).
With regard to the specific issue of preventing misuse of POA, SEBI has informed that it has, vide circulars dated April 23 and August 31, 2010, standardized the norms to be followed by stock brokers while obtaining POA from their clients. It has mandated that execution of POA is not compulsory, but is only an option available to the client. Also, the POA executed by the client in favour of a stock broker can be revoked by the client at any time.
(c): Government has requested SEBI to take appropriate action in time on investor grievances and send its reply to the complainants.
In this regard, SEBI has started a new web based centralized grievance redressal system called SCORES (SEBI Complaints Redress System) on June 8, 2011. SCORES is web-enabled and provides 24x7 online access to the complainants. All activities starting from lodging of a complaint till its closure by SEBI can be done online in an automated environment. The status of any complaint can be viewed online.
An investor, who is not familiar with SCORES or does not have access to SCORES, can lodge complaints in physical form. Such complaints are scanned and uploaded in SCORES for processing.
SCORES has reduced the processing time of complaints since physical movement of documents is not necessary.
In addition to the above, with a view to facilitating replies various queries from general public on matters relating to securities market, SEBI has launched toll-free helpline service numbers 1800 22 7575 and 1800 266 7575 on December 30, 2011. This helpline service is available from Monday to Sunday from 9:30 a.m to 5:30 p.m (excluding declared holidays) in 14 languages.