Investors lodge complaint against Action Financial Services; Anil Singhvi calls for expeditious solution by SEBI
Investors being unhappy with their brokers is not a new thing. Another case which has now come out in the open is with regards to the broker called Action Financial Services. The investors have made complaints to the market regulator Securities and Exchange Board of India (SEBI). Ze Business’ Ashish Chauhan gives the complete report to Managing Editor Anil Singhvi
Investors being unhappy with their brokers is not a new thing. Another case which has now come out in the open is with regards to the broker called Action Financial Services. The investors have made complaints to the market regulator Securities and Exchange Board of India (SEBI). Ze Business’ Ashish Chauhan gives the complete report to Managing Editor Anil Singhvi.
Chauhan said that complaints have been made against Action Financial Services India, which is also a listed company. The investors have made complaints against the broker as the latter has allegedly not been returning their shares or money since September.
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The company is neither returning shares of investors in the pool account or their money, Chauhan said.
The broker has been telling investors that it does not have money and its finances are now stuck in the market.
The company on 18 September informed the exchanges – BSE and NSE – to shut down its terminals. This suggests that the plan to shut down the terminal was in place. The investments made by the investors are now stuck with the company. While the investors have been requesting the company for returning their money, there is no clear answers given to them by the broker.
Citing his sources, Chauhan said that SEBI had asked one of the top exchanges to do an investigation against the broker. It has ordered a forensic audit of the company’s books, Chauhan further said.
The sourced have revealed to Chauhan that the company is running short of securities by as much as Rs 3-4 cr while the fund shortage is around Rs 2-3 cr.
The exchanges have received this information in the initial investigation. More information will come out of this from the forensic audit.
The company promoters have cited absence of top management people for running the company operations as the reason behind the problems. Chauhan who spoke to the promoters further said that the latter have denied any financial problems in the company.
Managing Editor Anil Singhvi said that it was surprising that despite a strong margin system, complaints related to brokers ‘failure' keep coming.
The problems would not be much if the broker is into broking only, Singhvi said adding that problems start if the brokers’ own investments have high exposure in the markets and they slip. The problem also arises when the broker finances another investor or operator, and this goes wrong.
As a regulator SEBI must ensure that the broking operations are completely separated from other operations, the Managing Editor said.
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Singhvi opined that these types of cases should be dealt with urgently to help investors.
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