SEBI vide its Circular dated 05th March, 2023 issued to all Registered Investment Advisers, all Registered Research Analysts.
The circular States:
SEBI issued advertisement guidelines for investment adviser (IA) and research analysts (RA).
The advertisement code shall provide clarity as to the forms of communication that would be considered advertising. Any form of communication by or on behalf of the IA or RA that influences investment decisions would be considered advertising. This includes pamphlets, circulars, brochures, notices, research reports or any other literature. It may also include any form of communication made through any electronic, wired or wireless communication, such as text messaging, telephone, television, etc.
The advertisement shall contain information such as the name, logo, registered address, and other such information regarding the publisher. It must provide information in an accurate and unambiguous language. The advertisements shall not contain any misleading or ambiguous information or anything that’s prohibited under the law. It shall not exploit the lack of knowledge or experience of the investor.
The standard warning that goes: “Investments in the securities market are subject to market risks. Read all the scheme-related documents carefully before investing”, should be in legible fonts (minimum 10 font size), SEBI said in changes to the code applicable to these entities. Any audio-visual reiteration of the warning shall be clear and understandable. A warning that contains 20 words and that runs for 10 seconds, both visually and verbally, will be considered clear.
Whenever the advertisement is being issued in a language other than English, it will be ensured that the standard warning is accurately translated into the language of the advertisement.
The mode of advertisement is SMS/Message/Pop-up, social media, etc., and the details such as full name, logo/brand name, full registered office address SEBI registration number, membership number of a SEBI recognized supervisory body and standard disclaimer are not mentioned, then official website hyperlink should be provided in such SMS/Message/Pop-up, etc. and the website must contain all such detail.
Investment Advisers and Research Analysts are also barred from using superlative terms such as “Best”, “No. 1”, “Leading”, Top Adviser/Research Analyst, “One of the best amongst market leaders”, etc., in their advertisements. They shall not include SEBI Logo for such purposes.
In other restrictions, all IAs and RAs shall procure prior approval for their advertisements from a SEBI-recognized supervisory body, such as BSE Administration and Supervision Ltd. in the case of IAs. They are also barred from engaging in any games, competitions, leagues, schemes, etc., which may involve the distribution of prize money, medals and gifts.
These restrictions are also applicable to any other investment, research, or consultancy agency associated with the IA or RA concerned and issuing advertisements with their name.
This circular shall come into force with effect from 1st May, 2023.
Link of the circular: https://www.sebi.gov.in/legal/circulars/apr-2023/advertisement-code-for-investment-advisers-ia-and-research-analysts-ra-_69798.html
About the Author
