SEBI Cracks Down on Unauthorized Advice in Securities Market

The Securities and Exchange Board of India (SEBI) has clarified that intermediaries cannot share client information or make transactions with unapproved advisors. This move, detailed in the latest FAQs, aims to safeguard investors and ensure adherence to updated regulations in the securities sector.

The Securities and Exchange Board of India (SEBI) has issued clear directives prohibiting intermediaries from engaging in transactions or sharing client details with those offering unauthorized financial advice. This announcement was made on Wednesday in an effort to maintain transparency and investor protection within India's securities market.

SEBI highlighted that sharing client information is tantamount to referring clients, and any such transactions would constitute an 'association' under SEBI's regulations. Therefore, intermediaries are instructed not to participate in any payments or data exchanges with unauthorized parties.

Despite these stringent measures, SEBI allows regulated intermediaries and their agents to collaborate for branding and marketing purposes, provided these associations steer clear of unregulated advice and unapproved return claims. The regulator emphasized compliance with the updated Securities and Exchange Board of India Regulations, 2024.

(With inputs from agencies.)