SEBI Introduces Advertisement Code for Investment Advisers and Research Analysts

SEBI Introduces Advertisement Code for Investment Advisers and Research Analysts

Effective from 1 May, the new rules are to further strengthen their conduct

The Securities and Exchange Board of India (SEBI) has barred Investment Advisers (IAs) and Research Analysts (RAs) from using extensive technical or legal terminology, or promising guarantees of assured return in their communication to investors.

The markets regulator instituted an advertising code for IAs and RAs prohibiting them from making statements that could mislead investors and using superlatives and complex language in their advertisements. The regulation has come a month after SEBI told mutual funds not to assure returns to investors.

In 2013 and 2014, SEBI had first brought in regulations for a code of conduct to be followed by IAs and RAs.

As per the new code, advertisements will include all forms of communications, issued by or on behalf of IA/RA, including pamphlets, research reports, newspapers, TV ads, emails, electronic messaging, and social media platforms. It has also banned them from using the SEBI logo in advertisements.

The move comes after the market regulator observed that some IAs and RAs) were prominently using brand names or logos in their advertisements, websites, publications, communications with clients and various documents.

While IAs and RAs may use brand names/logos, they are required to ensure that the information including the name of the IA/RA registered with SEBI, its logo, registration number, address, and telephone number were prominently displayed.

SEBI added that additionally, the compliance officer, his phone number, email address, and the grievances officer’s name, phone number, and email address were to be displayed prominently on statements, reports, or in any other form of communication with customers.