SEBI misrepresents public information on PMS as fiduciary; offers mindless response to simple RTI query  

April 17, 2012

A simple query to SEBI about aggregate list of assets under management was stymied as being fiduciary in nature, when parts of that information are already available in public domain. It shows SEBI’s intention to stall, rather than share information, with the public

Moneylife Digital team

In response to a RTI (Right to Information) application seeking information about notorious portfolio management services (PMS) of banks and brokers, market regulator Securities and Exchange Board of India (SEBI) has responded in a manner that defies logic. It has refused to disclose information on the quantum of Assets under Management (AUM) of each PMS, citing “fiduciary reasons”. Ironically, even as SEBI is busy doing this stalling act under its own rules for PMS, each PMS provider has to provide this information. All the RTI application was seeking this information in aggregate so that comparison and analysis is easier. SEBI ought to have it and share it. Certainly, saying that is fiduciary in nature is a lie. Once again it shows SEBI’s anti-consumer attitude.

An RTI was filed by an investor to seek information to find out which were the largest PMS, the best performing PMS, and so on. When shared with the larger public this information would be beneficial for the general public. However, SEBI regards this kind of information as a “fiduciary” breach, and therefore the public is not entitled to it.

According to the reply to the RTI, dated 24 February 2012, it said: “Please note that SEBI maintains data regarding AUM of each PMS in fiduciary capacity and the same is exempt from disclosure under Section 8(1)(e) of the RTI Act, 2005.“

The irony is that the same information is put up in public domain, for all to see. Where’s the question of fiduciary breach? For example, you can check HSBCand ICICI below:
 



It is pertinent to note that every portfolio manager is required to disclose to SEBI, as well as to the public, critical information pertaining to PMS schemes on its website. SEBI, vide its circular IMD/DF/16/2010 dated 2 November 2010, it clearly stated, “To ensure compliance with regulation 14(2)(b)(iv) of SEBI (Portfolio Managers) Regulations, 1993, Portfolio Managers shall disclose the performance of portfolios grouped by investment category for the past three years as per the enclosed prescribed tabular format. Portfolio Managers shall also ensure that the disclosure document is given to all clients along with the account opening form at least two days in advance of signing of the agreement. In order to ensure that the clients have access to updated information about the portfolio manager, portfolio managers shall place the latest disclosure document on their website, wherever possible.” (emphasis ours)

Having said this, how would a potential customer or investor decide which PMS to invest? For this, the investor needs to compare and contrast the performance of all available PMS schemes, across categories; namely discretionary, non-discretionary and advisory services. Since the kind of information sought is not readily available anywhere, the only option for the investor is to jump from one website to another, or make calls to relationship managers who tend to window-dress the numbers. Considering that the minimum investment for PMS is now Rs25 lakh, it is not a small amount of money; it is high stakes and serious business, which requires equally serious research.

We found out that SEBI has published only consolidated figures which are currently available on the market regulator’s website for all investors to see. If one peeks into the details, it doesn’t offer much value to the discerning investor. An investor would be interested in comparing and contrasting each and every PMS scheme, the same way as one would do for mutual funds and insurance. However, SEBI has made it only more difficult for investors to obtain publicly available information, for reasons that defy logic. If RTI is not the recourse for obtaining cohesive and complete set of data, then one can expect to spend countless hours, or for that matter days, trying to fetch publicly available information, thus making lives of investors miserable, thanks to SEBI.