New regulation alert: SEBI introduces advertisement code to strengthen the conduct of analysts and advisers

Advertisement code for research analysts and investment advisers

SEBIs New Regulations

Investment advisers and research analysts would now have to be more careful with their adverts. The Securities and Exchange Board of India (SEBI) has issued new compliance guidelines that specify a code of conduct for such advertisements.

Per the latest guidelines, research analysts or investment advisers cannot use too much of technical or legal jargon when explaining the product. Moreover, they cannot guarantee assured returns on investments when they publish their adverts.

Related - Here's a look at the SEBI procedure for launching passive ELSS schemes

The code of conduct for research analysts or investment advisers was first issued in the years 2013 and 2014. It aimed at regulating the advertisements so that investor interests are not hurt. In the latest addition to the code of conduct, advertisements or promotions released by research analysts or investment advisers are being targeted.

Here are some of the guidelines underlined in the latest announcement –

  • The guidelines would apply to all forms of adverts that are issued. These include video promotions, research reports, pamphlets, TV ads, newspaper promotions, emails, social media adverts, etc.
  • Research analysts, investment advisers, and entities acting on their behalf would have to comply with these guidelines.
  • False or misleading statements should be avoided. Moreover, statements made on a bias or assumption should not be allowed.
  • The statement issued in adverts should not exploit the lack of awareness or knowledge that investors might have.
  • Too much use of details is discouraged as it might confuse investors and mislead them.
  • Any type of analysis, report, or service cannot be claimed as free unless it is unconditionally free.
  • Research analysts or investment advisers cannot promise guaranteed or risk-free returns.
  • Advertisements about past performances are not allowed.
  • Analysts and advisers cannot host or indulge in any form of games, schemes, sports, or tournaments that include any form of prize money.
  • The name of the analyst or adviser with the registered address, SEBI registration, and other details should be mentioned in the advert. If the SEBI registration details are not mentioned, the hyperlink of the official website should be present.
  • A standard warning clause is a must in all advertisements.

Research analysts or investment advisers would have to get approval from the SEBI-appointed supervisory body before they release their advertisements. The supervisory body would check whether the adverts meet the aforementioned norms before they are released.

These new guidelines would come into effect from 1st May 2023, allowing research analysts or investment advisers ample time to make changes to their existing adverts. For investors, it is a step in the right direction as advertisements would become more informative and less misleading.

Related - Check out another latest guideline by SEBI regarding the use of e-wallets in MF investing

Investment advisers and research analysts would now have to be more careful with their adverts. The Securities and Exchange Board of India (SEBI) has issued new compliance guidelines that specify a code of conduct for such advertisements.

Per the latest guidelines, research analysts or investment advisers cannot use too much of technical or legal jargon when explaining the product. Moreover, they cannot guarantee assured returns on investments when they publish their adverts.

Related - Here's a look at the SEBI procedure for launching passive ELSS schemes

The code of conduct for research analysts or investment advisers was first issued in the years 2013 and 2014. It aimed at regulating the advertisements so that investor interests are not hurt. In the latest addition to the code of conduct, advertisements or promotions released by research analysts or investment advisers are being targeted.

Here are some of the guidelines underlined in the latest announcement –

  • The guidelines would apply to all forms of adverts that are issued. These include video promotions, research reports, pamphlets, TV ads, newspaper promotions, emails, social media adverts, etc.
  • Research analysts, investment advisers, and entities acting on their behalf would have to comply with these guidelines.
  • False or misleading statements should be avoided. Moreover, statements made on a bias or assumption should not be allowed.
  • The statement issued in adverts should not exploit the lack of awareness or knowledge that investors might have.
  • Too much use of details is discouraged as it might confuse investors and mislead them.
  • Any type of analysis, report, or service cannot be claimed as free unless it is unconditionally free.
  • Research analysts or investment advisers cannot promise guaranteed or risk-free returns.
  • Advertisements about past performances are not allowed.
  • Analysts and advisers cannot host or indulge in any form of games, schemes, sports, or tournaments that include any form of prize money.
  • The name of the analyst or adviser with the registered address, SEBI registration, and other details should be mentioned in the advert. If the SEBI registration details are not mentioned, the hyperlink of the official website should be present.
  • A standard warning clause is a must in all advertisements.

Research analysts or investment advisers would have to get approval from the SEBI-appointed supervisory body before they release their advertisements. The supervisory body would check whether the adverts meet the aforementioned norms before they are released.

These new guidelines would come into effect from 1st May 2023, allowing research analysts or investment advisers ample time to make changes to their existing adverts. For investors, it is a step in the right direction as advertisements would become more informative and less misleading.

Related - Check out another latest guideline by SEBI regarding the use of e-wallets in MF investing

NEWSLETTER

Related Article

Premium Articles

Union Budget