Can Sebi do better than flogging the dead horses?

Last Monday, the Securities and Exchange Board of India ( Sebi) put up a list of companies it has suspended over the past couple of years for failing to satisfactorily address investor grievances.

Sebi debarred these companies and their directors "from accessing the securities market and from buying, selling or dealing in securities directly or indirectly, in whatsoever manner, till all the investors' grievances against the company are resolved".

According to the list, the regulator debarred 17 companies in the year 2010-11, seven in 2011-12 and four companies this fiscal so far since April.

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Let us take the four cases debarred in FY12-13. Shukla Data Technics, which was barred in April and Alpine Industries, which was barred in July, have not disclosed any information at all to the exchange for several years.

The BSE site has a scroll saying "suspended for penal reasons". There is no information on price, shareholding, financials or announcements. Shukla belonged to the IT consulting industry while the latter is listed under "other agricultural products".

On the other hand, textile maker International Hometex and entertainment player Top Telemedia, which were suspended in August, showed some trading activity according to the exchange's site.

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All these appear to be long pending matters, some over a decade. For example, in the case of Alpine Industries the first unredressed complaint dates back to 1996, when I was in school studying for my 12th standard exams.

On October 14, 2002 (it's not a typo) Sebi Chairman GN Bajpai passed a conditional order saying "Alpine Industries/its directors would be debarred from dealing in and/or accessing the capital market for a period of five years," if it didn't address investor grievances within a specified period.

Ten years later, Sebi has passed the same order. So, the question any sensible person would ask is "What is the point Sebi is trying to make by putting such decade-old cases as action taken this year?"

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Can Sebi do better than flogging the dead horses? By barring directors and companies from accessing capital markets, how does Sebi address the real grievances of the investors – loss of hard-earned money. Worse still is banning the stock from trading on the exchanges.

Investor associations have been repeatedly making the point that suspending companies from exchanges only plays into the hands of the promoters who do not have any intention to service investors.

In Alpine's case, the company has submitted to Sebi that its factory has been sealed by the Madhya Pradesh State Industrial Development Corp. It wanted a "lenient view" as it was trying to settle all disputes "amicably".

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Suspension or debarment from the stock market does not affect the companies' working, instead it has an adverse impact on its public shareholders since they cannot sell their shares on the exchange until the suspension is revoked by the exchange or Sebi.

In 2010, a committee headed by then wholetime member MS Sahoo had recommended a series of steps to be initiated by Sebi and the exchanges.

These include taking penal action under section 23 of the Securities Contract Regulation Act, which has more stringent provisions for violations of provisions in the listing agreement.

Investor associations contend that these have not been implemented fully. Someone has to think out of the box to bring these decade-old cases to their logical conclusion.