India’s business houses are hardly the paragons of virtue as everyone knows. Many of the business houses are known to siphon money from the public companies to their private coffers through various legal and illegal means. It is difficult to find a company in India which has good corporate governance and the trust of investors. Investing in a mid cap and even sometimes a large cap company can be dangerous because of problems associated with corporate governance and information disclosure. Even after the fraud or malfeasance is proved, promoters and big stock market players can get away with nominal punishment like not operating in the market for X number of year. Unless the scandal turns out to be a huge one, life goes on as usual without any punishment or prosecution. Here are some of the common schemes used by companies to defraud investors:
Assocham which is India’s premier industry association however does not want to improve the corporate governance of its members. Rather it wants independent equity research houses to stop publishing the damning truth about its members. Note a Canadian research house Veritas has come out with scathing reports on top business groups like DLF, Indiabulls, Reliance and ADAG. Rather than introspect and try to improve the situation, Assocham wants to muzzle the independent unbiased voices. All the Indian and foreign brokerages and research firms are totally compromised and are unable to come out with truthful analysis.
In view of some recent ‘sensational’ analyst reports, the Associated Chambers of Commerce and Industry (Assocham) in India has asked the market regulator SEBI to investigate these reports and take further steps to avoid recurrence of such instances.
Referring to the reports, Assocham, said these ‘reckless’ reports create panic in the market and cause ‘immense damage’ to the securities markets.
Assocham feels that there have been some “serious regulatory gaps” in dealing with these “meddlers” who try to fudge the market by rigging share prices of certain companies.
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