Financial Advertisements – Read at your own RISK

Print Ads

Many of you would have come across IPO application forms in India. The printers have to be commended for printing large volume of data (statutory disclosure of information) in one sheet of paper. Most of the stuff mentioned in the IPO Offer Document relate to mandatory information stipulated by SEBI. These are meant to be risk factors. But the font size is so small that you will be putting your eyes at risk by attempting to read the Risk Factors. The disturbing fact is that not many people read the fine print before investing in these IPO’s. Most of these IPO forms used to make their way to groundnut stores and provision stores so that the shopkeepers can use them to wrap the products. However, because of the proliferation of plastic bags it is difficult to find these forms in our neighbourhood shops. The way out is to request the IPO issuer to publish the Offer Document in a readable font. But by doing so, the flotation costs of the Public Issue might shoot up. Hence we have to live with the current system.

TV Ads

In recent times, we come across many TV & Radio ads for IPO’s, Mutual Funds and Insurance. All these ads end with the Risk Factor. You might have observed that they talk in crystal clear English at the time of the main ad. Towards the end of the ad they just rattle of the Risk Factor in jet speed. Since prospective investors can’t really understand sentences delivered at a breakneck speed, SEBI can actually do away with such statutory disclosures in TV and Radio Ads. The only people making money are the TV / Radio firms, Ad agency and the guy who gives the voice to the ad.