In a pathbreaking order, the Chief Information Commissioner (CIC) Satyananda Mishra, at a hearing conducted on 17 January 2012 in Mumbai has directed the Securities and Exchange Board of India (SEBI) to put up monthly information of individual Portfolio Management Services (PMS) on its website effective from April 2013. Once the data is put up, it will allow investors to compare and contrast various PMS schemes and make careful and informed decisions, based on their track record before entrusting sums starting from a whopping Rs25 lakh or more to portfolio managers.

This order not only represents a big victory for Indian investors and comes at the end of a long battle by Moneylife to ask the regulator to make PMS schemes more transparent. For the past three years, Moneylife has also helped several investors recover funds, wrongly deducted by PMS. The wrongful losses have extended from a few lakh to as much as Rs1 crore.

The CIC s order said, We have carefully considered the facts of the case and the submissions made before us. It is an admitted fact that the desired information is available with SEBI, if not on an annual basis, at least on a monthly basis. Since this information is received electronically, it s publication through the website would not be a difficult task. By publishing such information about all Portfolio Management Services (PMS) regulated by it, SEBI would serve two objectives. One, help the investing public to access all information at one place and not have to visit 50 different websites and, two, eliminate the need for seeking such information under RTI, from time to time .

The CIC goes on to say, We would like to direct that the monthly information received from the Portfolio Management Services (PMS) which can be disclosed without attracting any of the exemptions provisions of the Right to Information (RTI) Act should be published on the SEBI website beginning April 2013 and an intimation sent to the Appellant in this case about this.

This has been a long battle for Moneylife. Our request for information was repeatedly rejected until we approached the CIC. Interestingly, Moneylife has been informally requesting SEBI to upload PMS performance information on its website for several years, but it refused to do so. In fact, after several hard-hitting reports about how leading banks and finance companies had damaged investors savings, SEBI issued an order asking them to disclose three years performance on its website and on application forms. But this was clearly not enough, since it did not allow comparison of authentic records.

In the final hearing before the CIC through a video conference, Gaurang Damani, a well known Mumbai-based activist appeared on our behalf. He argued that PMS is a very complex product requiring careful comparative analysis as parting with serious investment in the region of Rs25 lakh. Therefore, it was of utmost importance for people to have comparative data and it was not feasible to access the websites of 40 odd PMS providers to get the required information. While SEBI had irrationally taken the stand that this information was fiduciary in nature, we made the point that this information was already in the public domain, under SEBI s own direction. All that we wanted was that the data be made available at one source. It is ironical that information dissemination, which is key to SEBI s disclosure based regulatory regime, is likely to be put in the public domain only after a long battle with the regulator. The CIC heard our appeal on 17 January 2012. Convinced of our argument, CIC directed SEBI to put up information on the website.

Moneylife filed its first RTI query in 8 February 2012 after over two years of following up with SEBI to put out information on portfolio returns, assets under management (AUM), fees, etc, for individual PMS schemes on its website. Our application had been rejected on flimsy grounds (SEBI misrepresents public information on PMS as fiduciary; offers mindless response to simple RTI query).

We filed a first appeal to SEBI s appellate authority on 26 April 2012. This was rejected on the grounds that It maybe true that AUM of PMS may be available on the website of PMS. It may also be true that SEBI may receive AUM from each of the PMS for regulatory purposes. However, to provide the information in the form sought, SEBI will have to compile the information. SEBI is not expected to compile the information to suit the need of individuals. The arrogant callousness of the response should be seen in the context that SEBI itself has an investor education fund with crores of rupees, but won t make the effort to compile and upload data and information that is crucial for a sensible investor to make an informed decision. The attitude also exposes the hypocrisy of all the spending on financial education and financial literacy that is being mandated and pushed by the regulator.

The genesis of our battle for transparency in PMS performance was the saga of investor Rajan Manchanda, who lost a whopping Rs1 crore when it invested more than Rs2 crore with Kotak PMS (Sordid tales). In other words, half of his portfolio got wiped out and SEBI did little to help.

Another investor who approached Moneylife saw 30% of his Rs52 lakh evaporate when he invested in a PMS scheme. For more details, check out this article we had written: Broking Houses Make Investors Go Broke.

A doctor saw a big chunk of her PMS investment vanishing after investing in JM s portfolio schemes. She managed to get a few lakh rupees back after help from Moneylife. We had also compiled investors views on PMS here: Bad Experience.

Simply put, most investors do not know where to find information regarding PMS. Since they do not have information readily, they will not be able to verify deceiving numbers thrown around by ambitious sales persons. At the end of the day, they need to know if the high commission is worthwhile before parting with Rs25 lakh. Thus, with the information put up, now they will be in a better position to decide.