The Hindu Business Line : Alliance sans Arora... What's up next?

THE world of mutual funds will not be the same again after Saturday's order by SEBI against Samir Arora. Like the man in John Lennon's famous song, he was a great dreamer who helped many people hone their desire for big money. And they did well for themselves, especially so in the days when many of the funds managed by Alliance Capital delivered good returns.

The (former) Head of Asian Emerging Markets at Alliance Capital Management (Singapore) had a lot of followers in this country. People closely observed his moves, many of them investing in the funds managed by him while others directly picked up the stocks that featured in their portfolios. The idea was simple: Track one of the market's leading lights and try to profit from it.

For Alliance Capital, which is set to have a new CEO in Mr Rajnish Narula, the implications of the SEBI order are tremendous. The fund house, one presumes, would be by now faced with lots of questions. What will be the Alliance management's official stance with regard to the development? Could it not have prevented the situation from becoming what it did? How does it react to the statements made in the SEBI order, particularly to the issues that stemmed from the earlier bid for sale?

For those who have not seen the order, there are allegations of insider trading, non-disclosures and wrong disclosures and conflicts of interest - allegations that have led to a ban on his market-related activities, directly or indirectly, till further notice.

In India, the family of funds managed by Alliance includes Alliance '95, Alliance Equity, Alliance Capital Tax Relief '96, The Alliance Sector Series (including the well-known New Millennium as well as two more narrowly-focused schemes) and the newly-launched Alliance Frontline Equity.

In their own individual ways, these are quite diversified and have their assets spread over a whole range of sectors. Alliance Frontline, for instance, is pretty much broad-based, thanks to its policy of following companies representing sectors that make up the BSE-200 index.

Mr Arora, as every one knows by now, is slated to team up with Mr Rana Talwar for a new asset management venture. His departure from Alliance, therefore, is widely expected. It is not known whether the move has already triggered redemptions from these funds.

For the record, Mr Arora is free to file his objections to the SEBI order within 15 days as well as get a personal hearing, if he so wishes, on August 28.

Tailpiece: On hindsight, this may appear strange or even curious, but Mr Arora's last missive to investors (refer to the June quarterly) carried a quote by Jean Rostand, ostensibly dished out many years ago and dwelling on `merit' and `success'. It goes like this: "Merit envies success and success takes itself for merit". Readers, one feels, would be free to make their own assumptions.

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