IPO scam: SAT asks Sebi to pass fresh order against individual

M.Krishnan 2194 days ago The safety and yield factors keep the retail investors away from the capital market. What is the root reason? SEBI had made a policy change, when it came to power in the 90s. During its predecessor CCI's reign, IPOs, 100% underwritten, could be sold only for the face value, as per the Western-practice. They were not differentiated between base price and premium. On the amount of premium collected, no dividend is paid. So the yield is very poor. As per SEBI's diktat, companies could freely price their equity shares, by just giving justification of the price in the offer document. This enabled companies to collect exorbitant premium on IPOs, which were mistakenly understood as 'premium issues' by the gullible investors. As for the safety factor, many such companies vanished, and the investing public lost0000000000 of their hard-earned money. SEBI is adamant and will not change its policy. For this reason, there were only 6 IPOs in 2014. So to say SEBI's operation is successful, but the patient (read the primary segment of the capital market) is dead. An option is open to the Government change SEBI, in the same way as the Planning Commission (PC). Having sucessfully replaced PC, Arun Jaitely may actively consider this suggestion, if he wants the retail investors savings are channelled to the primary segment of the capital market.