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Fraud companies worry investors: Survey

Fraud companies have become the foremost cause of worry for the majority of middle to higher income investors while another sizeable population of higher income group holds the market regulator, the Securities and Exchange Board of India, 'ineffective.'

According to a survey on 527 households, conducted by the Society for Capital Market Research and Development, the other worries that plague the households includes 'excessive' price volatility, manipulation and insider trading, besides 'unfair' practices of brokers.

It said 27.5 per cent of the households surveyed held that the fraudulent company managements was one of the biggest worries, showing the increasing trend since only 17.4 per cent of the households had expressed such feelings in the year-ago period.

"One-fourth of household investors identified fraudulent company managements as the foremost cause of worry to them about the stock market. This really means the biggest problem affecting the investors' confidence in the stock market is that of corporate malfeasance and mismanagement," it said.

This feeling was more prominent in the income brackets of Rs 10,001-15,000, Rs 15,001-20,000, Rs 20,001-25,000 and over Rs 25,000 compared to those with income of Rs 10,000, the survey done during September-October said.

The sample size was 116 households in Rs 10,001-15,000, 115 in the Rs 15,001-20,000, 68 households in Rs 20,001-25,000 and 117 in over Rs 25,000 monthly income.

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