Sucheta Dalal :Express impact (16 Nov 2003)
Sucheta Dalal

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Express impact (16 Nov 2003)  

Companies are notorious for ignoring investor grievances. And although it is impossible to help all investors who have sunk their money into companies that vanish with amazing regularity, the issues that we highlight have helped some of our readers to get their money back, sometimes with full interest. On September 8, we wrote about the sleuthing by Ms M Gupta’s to recover her fixed deposit in Arihant Credit Capital Ltd (now ATN International, a thriving television company). It turned out that her LIC agent, who also handled this investment, had opened a false bank account in her name and siphoned out money that was ostensibly paid to her. He also accepted a payment of Rs 30,000 from Arihant instead of her principal investment of Rs 45,000 suggesting some collusion with the company. Within days of our report disclosing his fraud and naming the agent, he called Ms Gupta. After some haggling and wrangling, he paid her back the entire principal with full interest at 15% until the day of the settlement.

Another Impact

There was good news for the doctors who triggered off action on the allotment of physical shares in the UCO bank public issue also. Both Dr Dhelia and Dr Punjwani had applied to the IPO asking for electronic credit to their demat accounts, but were issued physical shares instead. Karvy Consultants, the registrar to the issue, had initially insisted that physical shares had only been issued only when the application was wrongly filled out or illegible. However, the doctors had proof that there were no mistakes in their form and demanded inspection of the original application. In fact, Dr Punjwani was allotted physical shares against one application and given electronic credit against another. They not only protested, but were prepared to fight all the way. Last week, Karvy decided to settle all claims against Dr.Dhelia by compensating him Rs 10,000. Dr Punwani was paid a compensation of Rs 5000. To Karvy’s credit, once the matter became public, it worked overtime to replace the physical shares with electronic ones and never tried to evade responsibility. The fact that the Securities and Exchange Board of India (SEBI) had begun an investigation probably helped. We say probably, because the Cameo Corporate Services, registrar to the Indian Overseas Bank issue has not yet bothered to redress investor complaints despite SEBI’s intervention.

Trading places

There is a buzz in the market these days about Credit Lyonnais First Boston’s (CSFB) revival plan when its two-year suspension by the capital market regulator ends in April next year. Its Indian operations were suspended due to price fixing deals and dubious lending to stockbroker Ketan Parekh in the Scam of 2000-01. CSFB is now supposed to have found itself a new country head with impeccable political credentials. Ajeya Singh, the son of former Prime Minister V.P.Singh, who was being mentioned in connection with the IDBI top job is expected to head CSFB in India. But the beleaguered investment bank has a lot more going for it too. Since the US Ambassador designate to India, David Mulford, is the former International Chairman of CSFB, old loyalties are expected to work in its favour. Especially since Mulford enjoys the reputation of being an excellent dealmaker. But that is precisely what alarms those who have witnessed former US Ambassador Frank Wisner’s aggressive support of Enron at close quarters.

Other moves

While on new jobs and placements, the government seems keen on doing something about finding a new chief for Unit Trust of India -II, or bringing a strategic investor to buy into the fund immediately. Interestingly, one of the names being considered to head UTI-II is C.B.Bhave, Managing Director of the National Securities Depository Limited (NSDL). It will be a tough decision for Mr Bhave. On the one hand, National Securities Depository Limited seems to be going from strength to strength after expanding into handling tax refunds, debt instruments, National Saving Certificates and maybe even provident fund investment. On the other hand, UTI-II is still India’s largest mutual fund.

Another NSE

Now that the National Stock Exchange (NSE) has become India’s biggest exchange with a common trading platform accessible across the country, the generic nature of its name is a big plus in the Indian context. But the generic nature of its name is set create confusion internationally. Eight years after relocating to Chicago, the 118-year old Cincinnati Stock Exchange is changing its name and plans to call itself the National Stock Exchange. The new name is supposed to establish that it is no longer a regional exchange and that it size and geographical spread has made it one of the largest stock exchanges in the United States with a national presence. All this happened after it introduced all-electronic trading in 1980. Clearly, it has more than just its name in common with our NSE.

-- Sucheta Dalal