Registration Must For Investment Advisers: SEBI Draft

Mumbai: SEBI has suggested that registration be mandatory for all investment advisers, in its draft norms. It has framed draft SEBI (Investment Advisers) Regulations, 2007, which is placed in public domain for comments and suggestions.

According to the norms, a person has to get a certificate to act as an investment adviser. He also has to be part of a self-regulatory body to receive a certificate under these regulations. The self-regulatory body needs to forward the application form to the board with its recommendations.

The board will then grant a certificate upon its discretion. And this certificate will be valid up until the time the investment advisor is a part of the self-regulatory body.

"Investment adviser means any person who for consideration is engaged in the business of providing investment advice to others, either directly or through publications or writings or electronic mails, or who, for consideration and as part of regular business, issues or publishes reports or analyses containing investment advice and includes any person who holds himself out as an investment adviser (by whatever name called) to others," says a SEBI draft note.

"An investment adviser shall act in a fiduciary capacity towards its clients and shall disclose all conflicts of interests as and when they arise or seem likely," the norm further says.

Disclosure Norms

"An investment adviser shall disclose to a prospective client all material information about itself, its business, its disciplinary history, the terms and conditions on which it offers advisory services, its affiliations with other intermediaries and such other information as is necessary him to take an informed decision on whether to avail himself its services," SEBI draft paper further said.

The SEBI paper further said that "An investment advisor who contravenes any of the provisions of the Act, rules or regulations; or contravenes any provision of the bye-laws of the self-regulatory organisation of which it is a member may be dealt with in the manner provided under the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer) Regulations, 2002."