Investors move HC against SEBI
Justice Vipin Sanghi, before whom the plea was listed for hearing, transferred it to the bench of Acting Chief Justice A K Sikri saying the plea involved larger public interest and should be heard by the bench which usually hears the public interst litigations (PILs).
The plea had been filed by Midas Touch Investor Association (MTIA), a registered society, seeking a slew directions to the Securities Exchange Board of India saying that money of thousands of investors are stuck up with 2,048 defaulting firms, barred from trading in National Stock Exchange and Bombay Stock Exchange for not following the listing terms stipulated by the market regulator.
"Direct SEBI to initiate action under Securities Contracts (Regulations) Act, 1956 for non-compliance of listing terms by 203 companies listed at NSE and 1845 at BSE (totalling 2048)," said the petition, which is likely to come up for hearing next week. The MTIA, which runs a helpline for investors, said it has received over 14,000 grievances between 2005 and June 2011.
"The petitioner received over 14,000 grievances from investors. Among these, around 2000 grievances were against 450 companies which were `suspended` by stock exchanges for non compliance with the listing agreement," it said. The stock exchanges (NSE and BSE) expressed "their inability to assist" in redressal of grievances against suspended companies and advised the society to take up the matter with the SEBI, it said. Referring to a news report, the petition said investors` money worth over Rs 58,000 crore was blocked due to suspension of 1450 companies by BSE and NSE.
"Inaction on part of SEBI – subsequent to failure of stock exchanges to initiate action against defaulting companies – in performing its statutory duties has enabled thousands of listed companies, their promoters and directors to get away with unfair practises and violation of listing terms without imposition of statutory monetary penalty and penal action.
"Small investors are the biggest losers due to such inaction. Resultantly, their estimated investment of over rupees one lakh crore has been blocked and is in suspended animation for years. The number of affected small investors may be one crore. They have lost heavily and withdrawn from the securities market, severely affecting raising of money by companies for speedier development of the economy," it said.
The defaults ranges from "non-receipt of annual reports, notices of annual general meetings, dividend, share certificates after allotment or transfer, failure to convert physical shares into demat mode, post returned back undelivered as the company was not physically present at its address etc." The petition also sought a direction to SEBI to debar directors, promoters and company secretaries from holding any position in any listed company under the law.