PASS Securities Operations and Risk Management Examination Difficulty: Intermediate 2 Questions   5 min read
📌 Chapter 7.2 — INVESTOR GRIEVANCE

Consider a scenario where your firm’s compliance desk receives a notification from SCORES regarding an investor grievance. You have already submitted an Action Taken Report (ATR) within the mandated 21-day timeline, providing a detailed breakdown of the trade execution logs and contract notes. However, the client is dissatisfied with your response, arguing that your explanation fails to address the discrepancy in the execution price.

When the client escalates the matter by requesting a review, the file is automatically diverted to the Designated Body, which is typically the Stock Exchange. This is the stage where the objective verification process shifts from an internal firm matter to an external regulatory review.

In your role within the operations or compliance department, you must recognize that the review phase acts as a second-level check on the market intermediary’s efficiency. The Designated Body does not merely accept your initial ATR at face value; they analyze the evidence, check the exchange’s audit trails, and determine if the grievance redressal was compliant with the Investor Charter.

For instance, if the client’s complaint involved a failure to provide a contract note on time, the Stock Exchange will cross-reference your trade logs against their own settlement system. If your firm’s records are found to be inconsistent with the exchange data, the burden of proof rests heavily on the brokerage.

If the Designated Body’s review still leaves the investor unsatisfied, the matter may eventually proceed to a final review by SEBI. This escalation is critical for operations professionals to track because it creates a permanent audit trail for the firm. Each request for review adds layers of documentation to your firm’s compliance history, which can impact your regulatory score or trigger direct inspections by the exchange.

Managing these cases with precision is not just about clearing a ticket on a dashboard, but about ensuring that the firm’s reputation remains intact and that the investor receives a fair, transparent assessment of their claim.

Treat the review process as an opportunity to reconcile systemic discrepancies rather than a defensive battle against a client. A well-documented file, including every relevant communication and trade verification, often resolves the issue at the Designated Body stage, preventing the need for more complex, costly arbitration. Always remember that your goal is to align the firm’s operational records with the regulatory expectations of the exchange, ensuring that every investor grievance is addressed with the rigor it demands.

Nuance

⚠️ Nuance
Many candidates mistakenly believe that a request for review automatically moves the case to a judicial court or a high-level tribunal. In reality, the review process is an administrative hierarchy within the existing market infrastructure, specifically designed to keep disputes away from lengthy litigation. Understand that the ‘Designated Body’ is your primary point of contact during the review, and any failure to provide timely, accurate responses to their queries at this stage is often viewed by regulators as a sign of operational negligence.

Check Your Understanding

Practice Question 1

Following a client’s request for review on SCORES, which entity typically acts as the primary Designated Body to conduct the review of the broker’s ATR?

Practice Question 2

If an investor is dissatisfied with the outcome provided by the Designated Body after a review, what is the next logical step in the grievance hierarchy?

This is a companion read for Section 7.2 — INVESTOR GRIEVANCE from PASS Securities Operations and Risk Management Examination by Akhilesh Gururani, available on Amazon Kindle.

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