The Admirable Length that SEC goes to simply protect Investors in USA…Can we expect this from SEBI or even the BSE and NSE ?

Thanks to Blog Reader Shahzad Vasaigara for this one…….and thanks Shahzad for ‘still’ reading my blog!
 
In July 2011,SEC had communicated a four pager to Nasdaq listed  and Beijing based,Yongye International Inc,a Chinese Company requiring them to reply to the points raised on the accuracy and adequacy of the Financial and Accounting Information that they had filed…quite analytical really and requiring more specific and better non conflicting disclosure….and clearly beneficial to Investors 
 
 
Likewise,surely in due course  our Capital Markets Regulator SEBI and the two major Exchanges BSE and NSE will be pushed to go deeper and more analytical into the Mandatory Filings by Listed Companies and require more information and clarifications on the disclosures….. in the best interests of Investors
 
Surely it will be sound and comprehensive inhouse  Objective and Subjective Analytical and Assessment Skills that will help SEBI regulate better and the Exchanges run more efficiently and effectively by requiring and insisting that Listed Companies and those seeking Listing comply fully with all Disclosure Norms….maybe such Norms need to be redefined to be made more comprehensive and even analytical……to meet the prime twin objectives of Investor Education and Protection…I have observed that over the years ,SEBI has really got more stringent and demanding on Prospectus Content and Disclosures by Companies who are planning a Public Issue of Shares….but More serious Work needs to be done to ensure timely,accurate and adequate Company Filings with Exchanges
 
….what happens now for Secondary Market Listed Companies is simply this
  • Companies issue Clarifications,proactively or when sought, to the Exchanges where they are listed,  on Media Reports on them
  • Companies simply comply with the Listing Agreement and other mandatory requirements to file regularly with the Exchanges  any announcement on results,board meetings to discuss and decide on capex,expansion or diversification,changes in capital structure etc         
Such Company Communications and Filings are displayed on Notice Noards and posted on the Exchanges Websites…..but like SEC,why cannot the BSE or NSE strengthen their process and actually go through ,as a rule and not as an exception,such communications from the Company with an analytical bend of mind and seek further information and clarification and disclosures if necessary to benefit Investors at large….that’s the end objective anyway !….what happens in reality is that most filings are simply filed away by the exchanges and not challenged for accuracy and adequacy at all !…Investors then have to look for and depend on Analysis by  Brokers and Blogs and by Reporters and Anaylsts in the Print Media and Anchors and Experts on TV…and believe me,quite often such analysis is paid for or undue favours given by the Company itself  for favourable coverage for itself or for reporting unfavourably on a competitor !….bias,vested interest,twisted interpretation,factual errors ,misrepresentation  and prejudice is then what you read and absorb and act on !…the risk ,therefore ,is higher
 
The First step really that BSE and NSE should really do is to freely make available on their website and in a user friendly format the last three Annual Reports  of all Listed Companies…The Listing Agreement requires a Print Copy  to be filed with the Exchanges by the Company inside a timeframe after the Year end….This latest Annual Report should be scanned immediately and uploaded on the Exchange Website…..Currently they are doing so but not all Companies on the Exchanges Website show Annual Reports available…and if so only for the last year or two…also one has to access the Company to access the Annual Report….A seperate Annual Reports database for all Companies from A to Z should be created for easy,convenient and quick access….This is a primary and basic need and requirement for all stakeholders,present and potential…and a bread and butter tool for all Fundamental Analysts
 
Years ago when I inquired from the Exchange MD at the time as to why Annual Reports were not available on the Exchange Website ,he simply shrugged…. such an Annual Report Database was being made available at a steepcost by one or two private vendors !…and the irony was that the Annual Reports were sourced from the Exchange itself!
 
I paid Rs 1 or Rs 2 for Prospectus and latest Annual Reports…my regular source were Investors themselves and even the ‘Pastiwalas’ who sold me these Reports by the Kilo !…it worked out Cheaper !
 
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Am reproducing below the communication,latest on top, between blog reader Shahzad and me recently on this
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Sir, 
 
Thank you so much for the kind words. Plz dont embarass me by asking me about it. You share so much superb info analysed by you with everyone which is so beneficial. Plz put it on your blog. Infact, since you are having such credibility and respect among high officials within the capital markets, i think you could also forward such examples to influential people who can then try and implement such rigid analytical practises in SEBI. 
 
I know there are many issues to all this. But i am also an optimisist and believe, somewhere down the line it shud start and will definitely.
 
Thanks a lot!
Shahzad

Sent from my iPhone

On Apr 14, 2012, at 22:09, “Gaurav Parikh” wrote:

 
Shahzad,
 
Lovely to hear from you…this is a inspiring illustration of the depth that SEC in USA goes to in their endeavour to both Protect and Educate the Investor by requiring and ensuring good Corporate Governance and Full Disclosures and Performance Analysis from listed Companies
 
May I reproduce your email to me on my blog with this SEC link and my comments ?
 
Warm regards,
 
Gaurav 
—– Original Message —–
From: Shahzad
To:Gaurav
Sent: Saturday, April 14, 2012 4:34 PM
Subject: SEBI should learn a few things from SEC
 

Hello Sir,

 
Hope u are doing well. Have been still reading your blog. 
 
Sir, i just went thru one SEC document in which they have raised many questions over the corporate governance and compliance issues of a Chinese agri company listed in NASDAQ. They have literally tried their best to make the company bow down, after doing proper analysis of their annual reports.
 
The whole letter is very crisp and to the point. When i read it, i could really imagine some big Judge throwing continuous questions on the CEO of this company.
 
I thought even you would like to read it. 
 
Although, i have never come across any such document by SEBI, i think this one is a real tough one and i am waiting gor the day when even our regulators start getting strict in the markets for betterment of investors.
 
 
 
 

Thanks & Kind Regards
Shahzad Jimmy Vasaigara
 
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PS : Just Spoke to  Another Faithful…and he reminded me that this was the reason why Reliance ,when it tried,was perhaps unable to list on Nasdaq when Infosys could !…inability to make adequate disclosure !!! ?

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