Tag Archives: Securities and Exchange Board of India

As a Indian Mutual Fund Investor are you aware of Employee Unique Identification Number (EUIN)?

Background

To safeguard the Mutual Fund Investors as well as Mutual Fund Distributors, SEBI vide circular dated September 13, 2012, has directed Mutual Funds to capture the unique identity number (EUIN) of the employee/ relationship manager/ sales person of the distributor interacting with the investor for the sale of mutual fund products, in addition to the AMFI Registration Number (ARN) of the distributor.

This Employee Unique Identification Number is referred as “EUIN”.

EUIN will be a unique number allotted to each Sales Person holding a valid NISM certificate and associated with an ARN holder.

       So, now Indians have to remember one more number!!

What is the Purpose of EUIN?

The main purpose of EUIN is to  assist in tackling the problem of mis-selling even if the employee/relationship manager/sales person leaves the employment of the distributor or his/her sub broker.

What is EUIN?

EUIN is a unique alpha numeric identity number allotted by AMFI to every employee, relationship manager or sales person of a distributor who interacts with investors for the sale of mutual fund products. EUIN is in addition to the ARN allotted to each distributor. It is also issued to individual and sole proprietorship ARN holders in their individual capacity as persons selling mutual fund products. Thus, while an ARN identifies a distributor, EUIN identifies the sales person who interacts with the investor.

 

Is EUIN compulsory?

Quoting of EUIN is mandatory in case of advisory transactions. If the transaction is an Advisory transaction, the ARN Holder should put his/her EUIN in the column provided in the application form. However, if the transaction is an “Execution Only” transaction, the space provided for mentioning EUIN may be kept blank.

It is upto investors to be careful in understanding whether the transactions falls under ‘advisory’, mode or ‘execution’, mode. If the EUIN and/or sub-broker code(ARN code of sales person/employee) is left blank, the transaction will be considered as an “execution-only” transaction.

 

Applicability of EUIN

A. Below table displays the applicability of EUIN for different types of transactions:

Transaction Type EUIN applicable

Purchases / Subscriptions:                          Yes

Switch:                                                       Yes

Registration of SIP / STP / DTP / Trigger:           Yes

Zero Balance Folio creation:                         No

Redemption:                                       No

Registration of SWP:                                  No

Installments under SIP / STP / SWP / DTP / Trigger

(registered prior to effective date, June 1, 2013) :         No

Dividend Reinvestment:                                No

Bonus Units:                                       No

Further, EUIN will not be applicable for overseas distributors who comply with the requirements as per AMFI circular CIR/ ARN-14/12-13 dated July 13, 2012, where the distributor shall be required to comply with the extant laws, rules and regulations of jurisdictions where they carry out their operations in the capacity of distributors.

 

What is required from you, as an Investor?

  • Please ensure that the application form, if routed through a Distributor shall have a valid ARN code, Sub broker ARN code, and EUIN.
  • Investors are further requested to use only those application forms/ transaction forms which have space/provision to write the Sub broker ARN code and the EUIN.
  • Investors transacting online or through any other mode offered by a distributor, are requested to mention the sub-broker ARN code and the EUIN while placing the transaction. If the transaction is an “Execution only” transaction, investors are requested to clearly indicate the same.

 

 

 Can I leave the EUIN box blank?

The EUIN can be left intentionally blank if an investor has not received any advice on the investment/transaction from the distributor. In such a case, investors should sign an “execution only” declaration on the application form. The declaration would be as below:

 

I/We hereby confirm that the EUIN box has been intentionally left blank by me/us as this is an “execution-only” transaction without any interaction or advice by the employee/relationship manager/sales person of the above distributor or notwithstanding the advice of inappropriateness, if any, provided by the employee/relationship manager/sales person of the distributor and the distributor has not charged any advisory fees on this transaction.

 

 

 

Indian investors motivated to invest in Cattle for ‘ghee’ investments, Sebi sees ponzi at play

 

ponzi   The latest Ponzi scheme to come under SEBI lens is the ‘Cattle and Ghee’, investment scheme, being run by HBN group in parts of North India.

The modus operandi, investors were lured to invest their funds in ‘Cattle and Ghee’, investment scheme. The company promised the depositors monies in Cattle and the returns were linked to the Ghee output from the cows!!

Yes, people fell for it, and the company could collect Rs745/- crores upto March 2011.

While going through the financials of the company and associated investorcomplaints, SEBI officials suspected something was amiss and an investigation started. In mid-2012, SEBI issued notices to the Group promoters to appear before the SEBI authorities for a detailed understanding of its investment scheme.  But the Group directors did not respond to the summons, and also the later summonses were returned undelivered.

SEBI suspects that the company is running a ‘Collective Investment Scheme (CIS)’ without its approval. Any CIS has to have SEBI approval. SEBI approval is only granted when the scheme has adequate safeguards for the depositors. Hence, many companies run schemes which resemble CIS, burt do not prefer SEBI registration.

The publicity by SEBI with regard to Ponzi Schemes, is an attempt to educate Indian consumers about the risks involved in investing in dubious schemes.

Unique Customer Identification Code (UCIC) for NBFC Customers in India

If you are customer of Non-Deposit taking NBFCs with assets of Rs 25 cr and above or any l Deposit taking NBFCs, be prepared to receive a brand new code for yourself.

RBI vide notification no RBI/2012-13/489 DNBS (PD).CC. No. 325/03.10.42/2012-13 dt May 03, 2013, has advised Non-Deposit taking NBFCs with assets of Rs 25 cr and above and All Deposit taking NBFCs, to make arrangements for issuance of Unique Customer Identification Code for NBFC Customers in India

The UCIC is to ease the monitoring of Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT) in the Indian financial market.

Ideally, a centralized KYC Registry for customers across different Financial Institutions is the best solution. However, setting up such a system will take some more time.

This is expected to be similar as a common KYC registry for SEBI registered intermediaries.

W.e.f January 2012, SEBI has set out revised KYC norms to make the process uniform across Securities Market and introduced a common KYC application form for all the SEBI registered intermediaries viz. Mutual Funds, Portfolio Managers, Depository Participants, Stock Brokers, Venture Capital Funds, Collective Investment Schemes etc.

In the interim, RBIS has advised NBFCs to make an immediate beginning in this regard by putting in place such identification code for their own customers. The UCIC will help NBFCs to identify customers, track the facilities availed, monitor financial transactions in a holistic manner and enable NBFCs to have a better approach to risk profiling of customers. It would also smoothen NBFC’s operations for the customers.

 

Consequently, NBFCs have been advised to initiate steps for allotting Unique Customer Identification Code (UCIC) to all their customers while entering into any new relationships. Similarly, existing individual customers may also be allotted UCIC by end-June 2013.

The common identifier might be the Aadhaar Number or PAN Number. In the next couple of months, matters would be more clear.

Sahara Papers – India Jugaad 1

 

Every cloud has a silver lining. As a result of Supreme Court of India judgment, Sahara Group has sent truckloads of papers to SEBI office.

Normally, companies file the required information with SEBI in an electronic mode. However, in the recent past, this is the first time, that SEBI had requisitioned paper documents from a corporate.

In defending the stand that it has to pay only a fraction of what Sebi has ordered it to, Lucknow-based Sahara Group decided to send millions of documents, packed in 31,000+ cartons loaded in 128 trucks, to the Sebi headquarters at Bandra Kurla.

This is where Indian Jugaad played an important role. After numerous brainstorming sessions, the regulator called upon Stock Holding Corporation of India (SHCIL), team to handle the processing of the physical documents.

The names and addresses of the Investors had to be retrieved from the bundles of documents. The regulator has now moved the documents to a warehouse in Navi Mumbai, in the outskirts of the city.

SHCIL deployed its Robotic Team, in scanning the Sahara Papers.

Background of SHCIL Robots:

Built in the early ’90s to store share certificates, the warehouse belongs to Stock Holding Corporation of India (SHCIL), a custodial and depository services firm. At the time, the government was unsure whether it could transform the stock markets to introduce dematerialised (demat) shares. But with the advent of the paperless era in ’94, the 80,000-square-foot facility with 40-foot high walls was left largely unused.

After two decades, it has now come handy. SHCIL has installed one robot and is in the process of placing three more to quicken Sebi’s humongous job of scanning millions of documents to verify Sahara’s claim. This is the first time that a regulatory authority in India is banking on robotics to prove itself in what has become a high-decibel tussle.

Over the years, SHCIL has been associated with many corporate’s in their endeavor to move into a digital preservation era. However, the association with Sahara has resulted in a very positive image for SHCIL