Grievances
Of
Sangita
(Client code- 28390)
VI/1732, Ta Colony,
Pantnagar-263145
Phone- 05944-235533
Mobile: 09456470344
Against
Edelweiss Securities Ltd., Godrej Coliseum, 11th floor,
Near Eastern Express Highway,
Behind Evarend Nagar, Slon (E),
Mumbai-400022
SEBI Registration No. INB 231193310 TM ID 11933
Subject: Grievances of Sangita (client code 28390) against Edelweiss Capital ltd., Mumbai
Dear Sir,
As I did not have sufficient time to manage our portfolio, I was interested to hire a PMS of some reputed company. I enquired three companies’ viz. Kotak securities, reliance capital and Edelweiss capital, on the basis of a survey. Since, Kotak Mahindra and Reliance Capital were requiring minimum of 10 lakh / 5 lakh respectively as cash to start with a PMS. This 5/10 lakh cash was not available with me in the time when stock market was passing through a turbulent phase and so I was not willing to sell off our portfolio. I had chosen the Edelweiss company for its PMS because the relationship manager told that they do not require 5/10 lakhs as other companies are requiring, instead, transfer the holdings and a small margin money. They also told that the holdings transferred will be intact in your DP account and as they are giving 5-6% of minimum returns per month, which was confirmed from the customers of the Edelweiss, as suggested by the relationship manager, Mr Binoy Thomas (see e-mail dated 28.03. page 29). The chronology of the event is given below:
1. Seeing the advertisement Edelweiss for its PMS on moneycontrol.com, I read the PMS of Edelweiss Capital as downloaded from the website (Annexure-I, page 6A) and requested the company to send me information regarding PMS (see the request through my mail dated 29.02. page 6C), which was acknowledged by the company vide their e-mail dated 29.02.2008 (page 6E).
2. Mr. Prafull Sharma, senior relationship manager contacted me telephonically and explained about the strategy adopted by the company. According to him, Edelweiss is delivering minimum of 5-6% returns monthly to the PMS of HNI account holder. When asked about risk aspect, he explained that the buying or selling or trading of FO is done on the basis of Edelweiss's strong research team recommendations, so there is no risk involved in trading through us.
3. Mr Prafull Sharma introduced me with Mr Binoy Thomas, Assistant Relationship Manager, Edelweiss Capital, who hypnotized me for taking the PMS with Edelweiss Capital only as this company being a new growing company will deliver results as promised. On March 05, he sent me a mail with attachment showing the returns of various PMS (e-mail dated 05.03. page 8).
4. After seeing the returns, I asked Mr Binoy Thomas to give me some numbers of his customers. He gave me two numbers (1) Mr Mashi of Goa business 09819660007 and (2) Mr Agrawal, cement businessman 09819890319. I do not know whether these persons were real customers or agents of Mr Binoy Thomas but they also confirmed that they are getting 5-6 % returns per month. The same was told to Mr Binoy Thomas vide my e-mail dated 28.03.2008 (page 29).
5. The relationship manager emphasized time and again to believe on him and he sent me several research reports of the company. The edelweiss portfolio manager was seen on CNBC TV several times. Believing him and thinking that Edelweiss Capital’s research is good, so they will be able to deliver as they are promising. The Edelweiss research reports received vide several e-mails from the company for showing the research of their company (e-mails dated 24.03.2008 (page 21), 26.03.2008 (page 26), 27.03.2008 (page 28), 09.04.2008 (page 30)) before opting my PMS with them.
6. I opted their PMS and opened HNI account on the promise from Mr Prafull Sharma and Mr Binoy Thomas that They will see the returns as promised. Margin money of Rs. two lakhs was transferred to Edelcapital on april 16. We made it clear that we are only interested for 5-6% returns as per your promise and we will not be doing anything. It is Edelweiss capital who will be trading to give returns as promised (see my mail dated 17.04.2008 (page 32)).
7. Trading started on April 21 in the user Id 28390 and DP ID 1203230000123218. 31 Stocks were also transferred (list attached, page 103). On April 22, another 5 stocks were transferred (list attached, page 104). Thus trading started with my holdings of 36 stocks and a cash amount of Rs 2.0 lakhs.
8. Mr Tejas Purohit was appointed as the dealer for account 28390. The accounting system designed by the company is so tedious that it is difficult to be understood by a person having PhD degree in IE. How can the same be understood by a common person. I could not understand the tedius system of ledger maintenance (see my mail dated 24.04.2008 (page 34) and 29.04.2008 (35)).
9. Mr Tejas purohit sold of some of stocks of my holdings and started trading in my account without my approval. when Mr Binoy Thomas was told that my dealer does not take my approval for any transaction being made by him. On asking about the returns, none of them gave me the true picture. They were kept saying that you will be getting the returns as promised. Also they keep on sending e-mails regarding performance of their product (E-mails regarding their PMS were also received after opting my PMS with them (see e-mail dated 02.07.2008 (page 41), 03.07.2008 (page 43), 05.07.2008 (page 45), 09.07.2008 (page 47), and 18.07.2008 (page 52)).
10. Seeing the ledger, although difficult to understand, several mails were written to either stop or take corrective measures so that you could deliver returns as promised (my mails dated 07.05.2008 (page 37), 04.06.2008 (page 39), 03.08.2008 (page 57) and 23.08.2008 (63)).
11. On 10th July the relationship manager was advised not to trade NIFTY but no action was taken and NIFTY was traded even after 10.07.2008 (e-mail dated 10.07.2008 (page 51) and copies of contract notes showing NIFTY trading after 10.07.2008 enclosed (pages 90-97)).
12. The transactions were done by untrained dealers of the company on the basis of ‘Tukka’ based research. The relationship manager was advised not to take risk as your dealers and research is not up to the mark. However, no action was taken on my advise (see my mails dated 07.05.2008 (page 37), 04.06.2008 (page 39), 10.07.2008 (page 51), 03.08.2008 (page 57), 23.08.2008 (page 63)).
13. Contract notes were received till May 08 electronically. Thereafter, the mails containing contract notes contained virus could not be opened as yet (please refer my mail dated 09-05 (page 38), 24.07.2008 (56), 05.09.2008 (65)).
14. Differential and higher brokerage was charged on the same scrips at different different times. The brokerage charged was also different for different scripts (see my complaint vide e-mail dated 03.08.2008 (page 57)).
15. All trading transactions were made by you and you only on the basis of your research recommendations without my approval. I advised not to take risks as I am not prepared to take risks (my mails dated 04.06.2008 (page 39), 03.08.2008 (page 57), and 23.08.2008 (page 63)) were ignored.
16. Whenever, reminder was sent for the deteriorating performance, I was told telephonically not to be in panic and wait for some time as we will deliver the returns as promised. I also requested them not to trade is better option to getting negative returns (my mails dated 07.05.2008 (page 37) and 04.06.2008 (page 39)), every time, Mr Prafull sharma and mr Binoy told me that "you have to wait till month end, we will deliver the results as promised. You will not be able to know your returns as the positions are taken".
17. Mr Tejas Purohit was replaced with Mr Amith Kumar, a new dealer as he was supposed to be the best dealer and Mr Binoy Thomas was replaced with Mr Nikhil Kumar who never spoken to me about any thing in my PMS.
18. Several E-mails (dated June 04 (page 39), July 10 (page 51), July 24 (page 56), Aug 03 (page 57), Aug 04 (page 58) and Aug 23 (page 63)) regarding the poor performance shown in my ledger. Every time I was assured of returns as promised (copy of mails attached).
19. On 9th or 10th of sept I was told telephonically that all positions have been squared off. I saw my ledger, it was showing only 38000/- only against investment of about Rs 3.5 lakhs (Rs 2.0 lakhs given initially Rs. 1.5 lakhs, unauthorised sale of my holdings dividend etc). This means my 90% capital has been eaten by the wrong trading done by the incompetent dealers.
20. I have been misinformed about the performance of my PMS. I tried hard to contact Mr Prafull Sharma, Mr Binoy Thomas, Mr Nikhil Kumar and Mr. Amith Kumar. All of them avoided me. No one has ever told me the true state of affairs in my PMS. What and why things went wrong inspite of my warnings and the promises made. The research of Edelweiss seems to be total failure if the dealers has acted as per the research but none had taken my approval for any trading which is the clear violation of the agreement.
21. The customer care unit has not given me any satisfactory responses on my querries with them.
22. Finally, the grievances were addressed to the CMD of the company, Mr. Rashesh Shah, vide e-mail dated 17.09.2008 (page 68). The company without investing the matter responded in negative vide its e-mail dated 26.09.2008 (page 76). The response of the company is not admissible because of the points raised above. The company says that firstly they have not given PMS; secondly all transactions in my account had been done by my oral instructions. We had never visited any office of the company. All correspondence was done either through e-mail or telephonically. The company has failed to prove that the transactions were made on my oral instructions. The written instructions/advises as reported above have been ignored by the company. The company has refused to furnish Telephone call details to prove my oral instructions and has no satisfactory answer for ignoring my written mails (copy of their mail dated 29.10.2008 (page 86)).
In view of the above, I feel cheated by Edelweiss Capital Ltd. The grievances were brought to the notice of the higher officials of the company through customer care of the company vide several mails as reported earlier. The investigations done by the company and the subsequent response of Mr J B Ram, VP, Compliance (vide e-mail dated 26.09.2008) has been closely analyzed and found that the company is not interested to resolve my genuine grievances and has covered up the unethical acts done by it to earn more and more profit because of the following facts:
(1) I had approached the company for its PMS Service. My needs and objectives were explained to the Relationship Managers who contacted me telephonically. I was never interested in any other service from the company. Since, I was told unambiguously several times that this is the PMS which would fulfill my needs and objectives. If it is not PMS, as the company says, then I have been given wrong product by the company (see Annexure-I, page 6 C-E).
(2) Most of the transactions were made willfully disobeying my written and oral instructions for earning higher brokerages for the benefit of the company by Mr Tejas Purohit and Mr Amith Kumar, dealers. On asking the basis of oral instructions from the company as I had never visited the company in person, the company has not provided any substantial proof like call details or other (email dated Oct 21, page 84). The written instructions vide my e-mail dated 07/05; 10/07 for not playing ‘NIFTY’ or taking risk has not been obeyed. The Nifty were traded even after 10/07 (copies of contract notes enclosed, page 90-97).
(3) Telephonically, sometimes both the dealers informed that we are buying and selling on the basis of the recommendations of our research team.
(4) No contract note was found in the envelopes containing 'client margin statement' and 'ledger position statement' after 31.07.2008.
(5) A non-uniform, differential heavy brokerage for the same and different scrips at different times was charged by the company.
(6) The monthly returns of 5-6 % not delivered as promised; instead a huge loss (more than 5 lakhs) has been inflicted on us.
(7) Misleading and wrong information were given by the dealers and relationship managers about the transactions and status of my portfolio.
You are, therefore, requested to kindly look into the matter and help me by asking the company to compensate the dues as promised.
Yours truly,
Sangita Dr R S Jadoun
VI/1732,
Ta Colony,
Pantnagar-263145
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