SEBI issued a circular on do’s and don’ts related to advertisement for Investment Advisers (IA) and Research Analysts (RA) yesterday. Here are some of the key highlights:
Applicability:
Applicable to all forms of communication (Physical, electronic, wired or wireless communication) from May 01, 2023
Information/disclosures in the advertisement:
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Name, SEBI registration number, office address, logo/brand name of IA and RA, CIN (if applicable)
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Standard warning in legible fonts (minimum 10 font size) which states “Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”. No addition or deletion of words shall be made to/from the standard warning.
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Information which is accurate, true and complete in unambiguous and concise language.
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In case any specific security/securities are displayed in the advertisement as examples, disclaimer that “The securities quoted are for illustration only and are not recommendatory” should be mentioned.
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In case the mode of advertisement is SMS/Message/Pop-up, social media etc., then official website hyperlink should be provided in such SMS/Message/Pop-up, etc. and the website must contain all such details.
Prohibitions in the advertisement:
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Anything which is prohibited for publication under the law.
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Statements which are false, misleading, biased or deceptive, based on assumptions or projections + misleading or deceptive testimonials.
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Statements which, directly or by implication or by omission, may mislead the investor.
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Any statement likely to be misunderstood or likely to disguise the significance of the same or any other statement contained in the advertisement.
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Any statement designed to exploit the lack of experience or knowledge of the investors.
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Any statement that is exaggerated or is inconsistent with or unrelated to the nature and risk and return profile of the product.
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Extensive use of technical or legal terminology or complex language and the inclusion of excessive details which may distract the investors. (No extra usage of Jargon)
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Reference to any report, analysis, or service as free, unless it actually is free and without condition or obligation.
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Any promise or guarantee of assured or risk free return to the investors.
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Any statement which directly or indirectly discredits other advertisements or intermediaries or makes unfair comparisons or ascribes any qualitative advantage over other intermediaries directly or indirectly.
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Reference to past performance of the IA/RA.
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Superlative terms such as “Best”, “No. 1”, Top Adviser/Research Analyst, “Leading”, “One of the best amongst market leaders”, etc. However, factual details of awards received by the IA/RA from independent organizations may be included.
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SEBI Logo.
Other compliances/requirements:
The IA/RA shall not engage in games, leagues, schemes, competitions etc. which may involve distribution of prize monies, medals, gifts, etc
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Copy of the advertisement shall be retained by IA/RA for a period of five years.
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Prior approval for the advertisement/material shall be obtained from SEBI recognized supervisory body before issue.
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If any IA/RA is suspended by SEBI and/or by SEBI recognized supervisory body, the IA/RA so suspended shall not issue any advertisement either singly or jointly with any other IA/RA, during the period of suspension.
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These norms shall be applicable to any other investment/research/consultancy agency associated with the IA/RA concerned and issuing advertisement wherein the IA/RA has been named in the advertisement.
You can read the full SEBI circular here