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In an adjudication order issued today, SEBI has imposed Rs.3 lakh fine on Banayantree Services (ET Money) for violation of several RIA norms.
SEBI found that while the company neither offered advice nor charged any advisory fee from, it did not conduct an internal audit citing it was unnecessary. SEBI clarified that it does not grant exemption based on business model.
Among some other violations were:
• Not appointing qualified employees
• Breaching code of conduct
• Failure to maintain infrastructure
• Not segregating investment advisory activities with MF distribution business
• Failure to discharge fiduciary responsibility
While the market regulator found some violations, it did not see any material impact on investors. SEBI, however, said that the role of an investment advisor is crucial to the development of the securities market, especially for the entry of the small investors who may rely on the advice of such RIAs.
SEBI said, “The role of an investment adviser is crucial as a facilitator of small investors into the securities market. So, it is of utmost importance that every IA assigns high priority to investor grievances and takes all necessary steps to redress the complaints received from investors at the earliest. The non-compliance on the part of the Noticee (ET Money) as brought out in the preceding paragraphs clearly shows that it has failed in its fiduciary duties owed to its clients.”
