Sebi plans to make investment advisers registration mandatory
PFW Bureau / Oct 11
Sebi has proposed to make the registration of the investment advisers with the regulator a must for offering advisory services to the investors. The regulator also wants to make it mandatory for the investment advisers to be a member of a self-regulatory organisation (SRO) for getting certification in this regard from Sebi.
In a six-page draft proposal, Sebi said that no person shall act as an investment adviser or hold himself out as an investment adviser unless he has a certificate from the commencement of the proposed regulations. But, Sebi said that an investment advisor can continue to offer the advisory services to the investors for six months from the commencement of this regulation.
Sebi said that it would be compulsory for the investment advisors to be a member of a SRO for getting certification from the regulator. The application shall be made to the SRO of which the applicant is a member and forwarded the same by the SRO to the regulator with its recommendations. “The certificate shall be valid till the investment adviser continues to be a member of the SRO on whose recommendation the certificate was granted”, the regulator said.
Sebi said that an investment adviser shall act in a fiduciary capacity towards its clients and shall disclose all conflicts of interest. “An investment adviser shall not divulge to anybody either orally or in writing directly or indirectly any confidential information about its clients which comes to its knowledge, without taking prior permission of its clients except where such disclosures are required to be made in compliance with any law”, the regulator said.
Sebi said that stern action will be taken against the erring investment advisors. They may be dealt with “as per the Sebi (procedure for holding enquiry by enquiry officer) regulations, 2002”.
Sebi has sought the public comments on the proposed draft - Sebi (investment advisers) regulations, 2007 - on or before October 31, 2007.
|
