Sucheta Dalal :Caveat Emptor
Sucheta Dalal

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Caveat Emptor  

January 13, 2010

 ‘Investor beware’ is the ruling dictum of the capital market. So investors are expected to research stocks, read up information, check notices from stock exchanges and, these days, watch out for any company disclosures to stock exchanges under the listing agreement. An investor from Delhi, who is fighting simultaneous disputes with at least three brokerage companies, has written to SEBI with an interesting observation.

He points out that the official websites of the BSE and the NSE have a disclaimer. The BSE says, "BSE does not, expressly or impliedly, warrant, guarantee or make any representations concerning the use, results of use or inability to use or access the information or contents of the Website, in terms of accuracy, reliability, completeness, currentness, functionality, performance, continuity, timeliness or otherwise, fitness for a particular purpose… etc.” The NSE website similarly says that in no event can it be held liable for any damages, losses or expenses “in connection with this website or use thereof or inability to use by any party, or in connection with any failure of performance, error, omission, interruption, defect, delay in operation or transmission, computer virus or line or system failure,” even if the NSE has been “advised about the possibility of such damages, losses or expenses.”

Clearly, this is ridiculous. The bourses are first-level regulators and several sensitive corporate disclosures are made to them under Clause 42 of the listing agreement. Investors are meant to rely on them for price and volume data as well as for rules and byelaws. That the regulator permits such sweeping disclaimers only underlines how the playing field is stacked against investors. That’s not all. Client-broker agreements, which are a prerequisite for opening brokerage accounts, are so one-sided that they are the best example of how investors are expected to trade with the deck stacked against them.

-- Sucheta Dalal