India’s media figures are also investors these days, and that worries some of the bureaucrats who are professionally committed to Total Worry. Reports the (always great) Indian Express:
The wake-up call sounded by M Damodaran, the outgoing chairman of Securities Exchange Board of India (SEBI), India’s stock market regulator, regarding the pressing need for better disclosure norms for “experts” and anchors who give “advice” on stocks in the media, couldn’t have come at a more relevant time. Even as Dalal Street has been swinging up and down in recent weeks, top government and SEBI officials say they are looking at how the “advice” problem is dealt with the world over, before working out a suitable mechanism for India.
Speaking to The Indian Express Editor-in-Chief Shekhar Gupta on NDTV’s Walk the Talk, Damodaran was strongly critical of the tokenism that passes as disclosure especially on TV channels. He even commented on what he called was the worrying new phenomenon of “anchor-investors,” TV anchors who are also investors.
… As far as the media is concerned, [Prof. Jayanth] Varma says, “The media should submit disclosures on a voluntary basis — that’s the best thing that can happen. In the US and other developed markets, for instance, the press holds to certain standards on their own, in order to ensure their credibility doesn’t come under a cloud. If disclosures are in place, there are no constraints on the freedom of press.” For example, analysts giving stock-tips on US business channels have to disclose — the very instant they mention a stock — whether they, their family, their firm or their clients hold the stocks being discussed. In India, however, as Damodaran said, the disclosure is done hastily, in a “routine” manner at the end of a show with no independent mechanism in place to monitor its veracity.
Question: If voluntary disclosures work for the media, why not for other advisers? I doubt that India has a single financial institution as corrupt as its government–and it’s the hungry little bureaucrats who will be enforcing those new standards. There’s a reason they call government’s smothering of small business the “License Raj.”