Date:05/11/2009 URL: http://www.thehindubusinessline.com/2009/11/05/stories/2009110551211000.htm

Back SEBI aims to check misuse of power of attorney

Our Bureau

Mumbai, Nov. 4 SEBI on Wednesday proposed, as an investor protection measure, a set of norms for execution of power of attorney (PoA) by clients favouring stockbrokers and depository participants.

SEBI’s measures come in the wake of reports of misuse of the PoA facility by brokers leading to losses to some clients.

“The PoA is to be executed in the name of the entity concerned and not in the name of any employee or representative of the stockbroker or depository participant,” a SEBI discussion paper said.

According to SEBI’s proposal, the PoA will have a clause for settlement of disputes with regards to the broker under the by-laws of the stock exchange where the trades have been executed. Depository related issues are to be settled under the by-laws of the depository concerned.

In merger or de-merger, the new stockbroker or depository participant will have to obtain a written confirmation from the client in case the PoA doesn’t provide the authority to continue the rights in favour of assignees, transferees and nominees, among others.