In a guidance note, SEBI has clarified that any consideration received by registered investment advisers (RIAs) in lieu of commission or compensation from any SEBI regulated company is a violation of investment adviser (IA) regulations.
This essentially means that RIAs cannot recommend regular plan of any securities market products or a securities market product where direct plan is not available.
This has come after a RIA raised a question if he can recommend regular plan of a financial plan where direct option is not available and pass on the commission or compensation to the client.
SEBI said, “An IA providing implementation services with respect to the products, where direct products are not available, irrespective of whether any consideration in any manner like commission, referral fees, etc. is received by IA, may amount to violation of the provisions of the IA regulations.”
