SEBI issues Advertisement Code for Investment Advisers & Research Analysts

Circular no. SEBI/HO/MIRSD/MIRSD-PoD-2/P/CIR/2023/51; dated: 05.04.2023

SEBI (Investment Advisers) Regulations, 2013 and SEBI (Research Analysts) Regulations, 2014 require Investment Advisers (IAs) and Research Analysts (RAs) to follow a code of conduct. Now, in order to strengthen their conduct while issuing any advertisement, SEBI has issued an advertisement code for IAs and RAs.

This advertisement code applied to all forms of communication such as pamphlets, circulars, brochures, notices, research reports, or any other literature, document, information or material published, or designed for use in any publication or displays such as newspaper, magazine, electronic messaging and social media platforms etc. that may influence investment decisions. The provisions of this circular shall be effective from May 01, 2023.

Further, all advertisements issued by IAs and RAs must include certain information, which is as follows:

(a) Name of the IA/RA as registered with SEBI, registered office address, SEBI Registration No., logo/brand name/trade name of IA/RA, and CIN of the IA/RA, (if applicable).

(b) Information which is accurate, true and complete in unambiguous and concise language.

(c) Standard warning in legible fonts (minimum 10 font size) which states that

“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.

(d) Whenever the advertisement is being issued in a language other than English, it will be ensured that the standard warning is accurately translated in the language of the advertisement.

(e) In case the mode of advertisement is SMS/Message/Pop-up, social media etc, and the details such as full name, logo/brand name, full registered office address, SEBI registration number, membership number of a SEBI recognised supervisory body and standard disclaimer are not mentioned, then official website hyperlink should be provided in such SMS/Message/Pop-up, etc and the website must contain all such details.

(f) Advertisements and communications/correspondences with clients shall include the disclaimer that “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.

Also, IAs and RAs are prohibited from using extensive technical or legal terms, complex language or promising guaranteed returns to investors in their communications. The advertisement must not contain anything prohibited for publication under the law or any misleading or deceptive testimonials, statements that are false, misleading, biased or deceptive, or based on assumptions or projections, etc.

Before issuing any advertisement, IAs and RAs must obtain prior approval from the SEBI-recognised supervisory body (e.g. BSE Administration & Supervision Ltd. (BASL) in case of IAs).

In the event of suspension of any IA/RA by SEBI and/or by SEBI recognised 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.

The IA/RA must not engage in games, schemes, competitions etc, involving the distribution of prize monies, medals, gifts etc. They must retain a copy of the advertisement for a period of 5 years as per Regulation 19(2) of the SEBI (Investment Advisers) Regulations, 2013 and Regulation 25(2) of the SEBI (Research Analysts) Regulations, 2014.

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