MC Insider: Petro share boomerang, founder who hates a photo, co-location fall guys, front-running clampdown, and more

Unable to make money off large-cap state-owned refiners, a band of high net-worth individuals (HNIs) had turned its attention to a petrochemical company in their own neighbourhood. Last week, this group started to accumulate shares of an Andheri-based petrochemical company in the hopes of minting big money from the upswing in fortunes of petrochemical companies globally after the Russia-Ukraine war. Unfortunately for them, a day after they started accumulating, the government pulled the trigger on imposing windfall gains tax. Talk about bad luck, eh?

We hear that the investigation into the NSE co-location scam is leading to the doors of certain retired IAS officers. They seem to have favoured brokers who returned the favour by giving business to the officers' children who are practising CAs and lawyers. The officers were close to the earlier political regime and helped implement their 'policies' and, when the political masters changed, the officers switched loyalties too and shared tidbits about the earlier regime's transgressions. Now, the new political masters are out for blood and they are willing to sacrifice a few retired officers to go after their political rivals. We also heard that the IAS lobby is working hard to protect their once seniors. Whether they will succeed, only time will tell. As they say, to survive under political masters, officers need to develop a 'healthy' moral vacuum.

In the eyes of the regulator, fintechs are the bad boys in finance and the warnings have been coming fast. Most of them have been on lending but there could be some new trouble brewing. New-age bond platforms that some fintechs have floated are giving retail investors a taste of the forbidden. Instead of a vanilla bond, a bunch of these platforms are offering structured debt with a guarantee of double-digit returns. One such popular product involves a ride-sharing app in which the fintech lends to a fleet operator and offers a security backed by these loans to its investors. The carrot is investors get monthly or quarterly payments with a fair warning that these are high-risk securities. The loan to the fleet operator has a stifling interest rate given the risks involved. The issue in such a structure is that there is nothing written in the rulebook of any regulator whether such securities can be chopped up into tiny pieces and given to retail investors. Is this mis-selling or just good old financial engineering that comes from the gaps of regulatory arbitrage? We hear that regulators have gotten a whiff of this. Before this proliferates, something needs to be written down, even if it is in sand.

According to a senior banker, officials in disinvestment and finance departments have had several meetings in recent weeks with some bank managements and potential investors to push through stake sales in public sector banks (PSBs). The idea seems to be pitching PSB privatisation as the top reform item ahead of the 2023 budget. However, this isn't easy. Even the decision behind introduction of the recently proposed Bill that will allow the government to exit completely from sarkari banks is said to be following suggestions from certain investors, we are told. Despite all these efforts, there is no meaningful investor interest in PSBs yet. Anyone there?

During the pandemic, cases of front-running at mutual fund houses rose. Usually, fund managers are monitored in fund houses, with even their phone calls recorded during market hours. But the pandemic led to many of them working from homes and that led to weaker monitoring, and there is a school of thought that this is what led to more cases of front running (besides the huge influx of retail investors and the promise of bigger profits). With Covid coming in waves, the market regulator seems to be preparing for another WFH scenario. We hear that the regulator is working on a draft framework to monitor the working of fund managers from their homes. They seem to have collaborated with retired fund house chiefs to draft this. Of course, the framework will be discussed in public only if WFH is back.

The image management team of this celebrity fintech founder is losing sleep over a picture that keeps resurfacing in media reports. The photo is of the man using a handkerchief to wipe his tears. That image actually dates back to the day of the company's listing ceremony and those were tears of joy after he was overcome with emotion. But that photo has become a ubiquitous choice for any article that is associated with the problems in the said company. The firm doesn't want this photo to emerge again. Ergo, journalists receive a deluge of messages asking not to use it citing negative publicity for the founder. But it looks like the crying face will not go off the newsrooms anytime soon.

India is very close to achieving a remarkable feat of administering two billion COVID-19 jabs and the government is planning a media blitzkrieg to publicise this grand success. Top health administrators who have been the face of the country’s pandemic response have been duly instructed to speak to the media in detail on what a mammoth challenge it has been due to lack of experience in dealing with adult vaccination and given India’s population size and geography. However, as the country’s pace of vaccination has slowed in the last few weeks, these mandarins have to wait longer than expected before they go to the press with all their cylinders blazing.

A party recently to celebrate a successful startup exit felt more like a wake. Not surprising, considering this particular sector is facing the wrath of the regulator, which took measures to clip wings of challengers that were giving the incumbents a run for their money. While some founders said this was in the works, others were talking about the way forward. Two startup founders who compete in the same space were also seen engaged in a long conversation on the recent developments. An enemy's enemy is a friend, as they say!