Well, one equities dealer was caught with his hand in the till….he is said to have benefited by Rs. 2 crores.
Hdfc Trustee company has been fined Rs. 55 lakhs.
The structure of an amc is such that the Trustees are responsible to certify that the internal processes are fine and working. Obviously it was not working, and this equities dealer was caught. Is it a systemic failure? I think yes.
Did it bother the fund house? Well maybe a little bit, but not too much. The investors just went on investing saying ‘these days morals have come down’ or some such bull. Fines should be a huge deterrent for the company. The word ‘Trustee’ means a person who can be trusted and the standards set by the courts is quite high. See the English decisions or even the Indian decisions if you are in doubt!
Sebi should have taken action against the trustees (they have a personal liability in case of fraud, and this is fraud) – there should have been personal fines. Clearly the internal audit, internal control systems, compliance, operations, Trustees have all failed….and there is no mention of all this. Levying a piddly fine of Rs. 55 lakhs (remember this industry has seen Million US dollar bonuses) is like a joke.
The worst thing of course there is no attempt to quantify the loss incurred by the schemes under the management of Hdfc. Having a good fund management team cannot be an excuse for leakages elsewhere.
My friend said : “why does it matter to you…if you are not happy with the returns, WALK. ”
Walk I will, not sure when. The worry is I have no clue what is happening in other fund houses. This one off incident seems to have come out as an accident, not as a pattern or an investigation or tracking…and that is scary, very scary indeed!!
Post Footer automatically generated by Add Post Footer Plugin for wordpress.