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SEBI has issued an advertisement code for Registered Investment Advisors (RIAs) and Research Analysts (RAs) in which it has directed RIAs to include a disclaimer saying they cannot provide assurance on returns in their advertisement and client communication.
The disclaimer reads, ‘Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.’
The regulator clarified that such a disclaimer should be used in all forms of communications issued by or on behalf of RIAs that may influence investment decisions of any investor or prospective investor.
Here are some key highlights of the new advertainment code:
An advertisement should disclose
- Details of IA/RA - name as registered, registered office address, registration number, logo/brand name/trade name and CIN if applicable
- Accurate, true and complete information in unambiguous and concise language
- Standard warning stating ‘Investment in securities market are subject to market risks. Read all the related documents carefully before investing’ in a legible font (minimum 10 font size) and a clear and understandable manner (at least 10 seconds of visual and voice over reiteration in audio-visual media)
- Standard warning in the language of advertisement
- Official website hyperlink having the full name, logo/brand name, full registered office address, SEBI registration number, membership number of a SEBI recognized supervisory body and standard disclaimer where such details are not messaged in SMS/message/pop-up, social media etc.
- Disclaimer that ‘The securities quoted are for illustration only and are not recommendatory’, where any specific security/securities are displayed
An advertisement should not contain
- Anything prohibited for publication under law
- False, misleading, biased or deceptive statements based on assumptions or projections
- Misleading or deceptive testimonials or statements
- Extensive use of technical, legal terminology or complex language
- Excessive details which may distract investors
- Reference to past performance of the RIA/RA
- Statement which directly or indirectly discredits other advertisements or intermediaries, makes unfair comparisons or ascribes any qualitative advantage over other intermediaries directly or indirectly
- Superlative terms such as ‘Best’, ‘No. 1’, ‘Top Adviser/Research Analyst’, ‘Leading’, and ‘One of the best amongst market leaders’ (Factual details of awards received by the IA/RA from independent organizations may be included)
- SEBI Logo
Other compliance/requirements
- Prior approval of SEBI recognized supervisory body (e.g. BSE Administration & Supervision Ltd. (BASL) in case of IAs) before the issue of advertisement/material
- Suspended RIA/RA shall not issue any advertisement either singly or jointly with any other RIA/RA, during the period of suspension
- RIA/RA shall not engage in games, leagues, schemes, competitions etc. which may involve distribution of prize monies, medals, gifts, etc.
- RIA/RA to retain a copy of the advertisement for five years
- Any additional guidelines as may be specified by SEBI or SEBI recognized supervisory body from time to time
This Advertisement Code will be applicable with effect from May 1, 2023.
