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My Dream SIA (Small Investors Association) Structure by K.Haputantri
The background:- I have been thinking aloud, from the very first day I heard of scams in the SEC, of a robust SIA to promote & protect the small investors from the vagaries of sophisticated stock market players who began to flees the gullible novices in the bourse during its peek and thereafter. Since then, I have read many articles, heard many comments from the general public and also heard the SEC Chief telling that they too intends to promote one not as a welfare society but armed with a proper mandate backed by the SEC, the all powerful Statutory Authority.
Nothing came out with certainty until the stock market bubble was defused by timely intervention of the SEC and the SEC was under severe pressure from the so-called stock market mafia for the very obvious reason that the investigations against seventeen suspected manipulators were fast tracked and nearing completion. I am very sad to hear that the Chairman SEC was forced to resign even before the birth of SIA. He sacrificed his post while fighting for the maintenance of sanity in the bourse for the benefit of a large number of investors including small investors. We should not forget that his predecessor too had succumbed to the same fate unceremoniously. In a way, we have two Heroes who succumbed to the same fate in action. May they live long and gain more and more strength in the future to fight back the criminals.
The Govt., will soon appoint a new Chief to the SEC and he too will be vulnerable to the same fate if SEC mandate is exercised without fear or favour. If he tows the line of influential suspects the mandate of the SEC would be worthless and investor confidence would erode. ? Can we be complacent now and adopt a wait & see approach under the circumstances. I doubt very much. Hence, the proposed SSIA is more relevant today than before as the history is repeating itself damaging not only the wealth of genuine investors but also the integrity of the SEC.
A Discussion on The Mandate of SIA:- In my opinion, the SSIA should not be a mere welfare association meeting once a year, writing petitions on issues at hand to authorities and issuing press releases when necessary. An SSIA, a body corporate which can sue & be sued with a well thought of structure and a workable strategic plan would be very handy under the present predicament more than ever before.
Fighting corruption and preservation of rights of small investors in the bourse should be only one of the mandates of the forum. Instead, SSIA should focus more on collective effort to engage in stock trading, education, facilitation and assisting the members in investing their savings in a profitable and professional way. SIA should be able to harness the savings of the rural investors who never dreamt of investing in the SEC. The power of collective financing is enormous. Then only the SSIA could be equal to the task and match the challenge of the HNWI criminals in an effective way. Otherwise it would die a natural death like all other voluntary gatherings we have seen.
Suitable Structure and Gradual Evolution of SIA :- I suggest that we module the SSIA in an evolutionary path leading to a fully fledged investment arm of the small men & women emulating the SANASA model. Of course, we will not be able to setup such an elaborate institution at once, but if we have a strategic plan to develop one in stages we are sure to succeed. The structure should be flexible enough to accommodate not only the free lance investors but also those novices who want to pool their resources to participate in investing through SIA.
During stage one (two years or less) SIA can be a non-profit limited liability company formed in line with a cooperative society. A campaign for membership and education of rural membership can be the priority while fighting for the rights of genuine investors. Only a nominal membership fee or one off payment may be requested in stage one.
Stage two (third & fourth years) would be the capital formation stage while the structure can be similar to SANASA ( prior to making it a public quoted company). A certain minimum percentage of the cost of member portfolios may be requested from those members who want to pool their funds for investment purposes. No maximum limit should be imposed. This can be optional and not mandatory. Such members can be given an attractive interest (often above the bank rate) and all members including free lance members can borrow funds when-ever they need at a concessionary interest rate (often less than the rates brokers charge). If the fund can afford, excess funds can be given as credit to outsiders at competitive bank rates.
Stage Three would be the final stage where the SSIA can be listed in the SEC as a fully fledged investing arm of the masses.
Discipline & Maintenance of Professionalism:- All members should be subject to a strict Code of Conduct in order to maintain discipline. Any member suspected of malpractice by the authorities should be subjected to temporary suspension of membership immediately and on completion of the inquiry by the authorities if found guilty immediate removal from membership would result.
The background:- I have been thinking aloud, from the very first day I heard of scams in the SEC, of a robust SIA to promote & protect the small investors from the vagaries of sophisticated stock market players who began to flees the gullible novices in the bourse during its peek and thereafter. Since then, I have read many articles, heard many comments from the general public and also heard the SEC Chief telling that they too intends to promote one not as a welfare society but armed with a proper mandate backed by the SEC, the all powerful Statutory Authority.
Nothing came out with certainty until the stock market bubble was defused by timely intervention of the SEC and the SEC was under severe pressure from the so-called stock market mafia for the very obvious reason that the investigations against seventeen suspected manipulators were fast tracked and nearing completion. I am very sad to hear that the Chairman SEC was forced to resign even before the birth of SIA. He sacrificed his post while fighting for the maintenance of sanity in the bourse for the benefit of a large number of investors including small investors. We should not forget that his predecessor too had succumbed to the same fate unceremoniously. In a way, we have two Heroes who succumbed to the same fate in action. May they live long and gain more and more strength in the future to fight back the criminals.
The Govt., will soon appoint a new Chief to the SEC and he too will be vulnerable to the same fate if SEC mandate is exercised without fear or favour. If he tows the line of influential suspects the mandate of the SEC would be worthless and investor confidence would erode. ? Can we be complacent now and adopt a wait & see approach under the circumstances. I doubt very much. Hence, the proposed SSIA is more relevant today than before as the history is repeating itself damaging not only the wealth of genuine investors but also the integrity of the SEC.
A Discussion on The Mandate of SIA:- In my opinion, the SSIA should not be a mere welfare association meeting once a year, writing petitions on issues at hand to authorities and issuing press releases when necessary. An SSIA, a body corporate which can sue & be sued with a well thought of structure and a workable strategic plan would be very handy under the present predicament more than ever before.
Fighting corruption and preservation of rights of small investors in the bourse should be only one of the mandates of the forum. Instead, SSIA should focus more on collective effort to engage in stock trading, education, facilitation and assisting the members in investing their savings in a profitable and professional way. SIA should be able to harness the savings of the rural investors who never dreamt of investing in the SEC. The power of collective financing is enormous. Then only the SSIA could be equal to the task and match the challenge of the HNWI criminals in an effective way. Otherwise it would die a natural death like all other voluntary gatherings we have seen.
Suitable Structure and Gradual Evolution of SIA :- I suggest that we module the SSIA in an evolutionary path leading to a fully fledged investment arm of the small men & women emulating the SANASA model. Of course, we will not be able to setup such an elaborate institution at once, but if we have a strategic plan to develop one in stages we are sure to succeed. The structure should be flexible enough to accommodate not only the free lance investors but also those novices who want to pool their resources to participate in investing through SIA.
During stage one (two years or less) SIA can be a non-profit limited liability company formed in line with a cooperative society. A campaign for membership and education of rural membership can be the priority while fighting for the rights of genuine investors. Only a nominal membership fee or one off payment may be requested in stage one.
Stage two (third & fourth years) would be the capital formation stage while the structure can be similar to SANASA ( prior to making it a public quoted company). A certain minimum percentage of the cost of member portfolios may be requested from those members who want to pool their funds for investment purposes. No maximum limit should be imposed. This can be optional and not mandatory. Such members can be given an attractive interest (often above the bank rate) and all members including free lance members can borrow funds when-ever they need at a concessionary interest rate (often less than the rates brokers charge). If the fund can afford, excess funds can be given as credit to outsiders at competitive bank rates.
Stage Three would be the final stage where the SSIA can be listed in the SEC as a fully fledged investing arm of the masses.
Discipline & Maintenance of Professionalism:- All members should be subject to a strict Code of Conduct in order to maintain discipline. Any member suspected of malpractice by the authorities should be subjected to temporary suspension of membership immediately and on completion of the inquiry by the authorities if found guilty immediate removal from membership would result.
