SEBI Tightens Grip on Unregistered Advisors to Safeguard Retail Investors

SEBI is taking firm steps to protect retail investors by cautioning them against unregistered stock tips, conducting probes, and issuing directives against non-compliance. Minister of State for Finance Pankaj Chaudhary highlighted the SEBI regulations, which mandate that only registered individuals can provide investment advice. SEBI is also addressing associations between regulated and unregistered entities.

To safeguard retail investors, SEBI has implemented several measures, including cautioning them against trading on stock tips given by unregistered entities, conducting investigations, and issuing directives against non-compliant parties, Parliament was informed on Tuesday.

Under SEBI's rules, no individual can offer investment advice without registration with the capital markets regulator.

SEBI (Investment Advisers) regulations outline the requirements for registration, duties, responsibilities, and penalties in cases of default, Minister of State for Finance Pankaj Chaudhary stated in a written reply to Rajya Sabha.

Responding to a query about the government's steps to protect retail investors from frauds on social media by self-proclaimed stock market experts, Chaudhary noted that SEBI has released multiple press statements advising investors to deal only with registered investment advisers.

Investors can verify the registration status of investment advisory service providers on SEBI's website. The regulator has also cautioned against relying on tips or recommendations from unregistered entities or individuals impersonating SEBI-registered intermediaries, Chaudhary added.

Upon receiving complaints or taking suo moto cognizance, SEBI investigates these entities. In cases of non-compliance, appropriate sections of the SEBI Act, 1992, and various SEBI regulations are applied, and necessary directions are issued to non-compliant entities, he further elaborated.

Additionally, the issue of SEBI-regulated intermediaries associating with such unregistered entities was discussed at SEBI's Intermediary Advisory Committee. Based on its recommendations, a proposal to implement regulatory amendments to limit the association of all SEBI-regulated intermediaries with unregistered entities has been approved, Chaudhary said.