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The Securities and Exchange Board of India (SEBI) has just released a circular on the use of brand names or trade names by investment advisers and research analysts the next day after issuing a comprehensive set of regulations for advertisements published by these firms.
In a circular published on April 6, 2023, the Securities and Exchange Board of India (SEBI) outlined new rules for investment advisers (IA) and research analysts (RA) regulating the use of trade names, brand names, and logos in their marketing materials and communications. The circular encourages transparency, prevents investor uncertainty, and ensures legal compliance.
Table of Contents
A company or individual with a government registration enabling them to select, manage, and suggest investments for customers is known as an investment adviser. Stock brokers are another name for investment advisers.
Investment advisers often offer continuing advice on purchasing, selling, and holding investments. They also keep an eye on your investments’ performance and their compatibility with your overall financial goals. The total cost of all the assets stored in your account with the adviser is often used to determine the charge you will pay for this assistance. You might have to pay additional fees to maintain your account and the investments you buy, sell, or hold. Moreover, advisors could offer financial planning services or guidance on asset allocation or market trends.
Financial data is gathered by research analysts, who then analyse it, draw logical conclusions, and create a research report. A research analyst is an expert in finance who collects, examines, interprets, and creates research reports on securities, stocks, and other assets.
The primary responsibility of a research analyst is to conduct research in particular disciplines, analyse the data, interpret the results, and communicate the findings to a targeted audience with interests in marketing, finance, operations, and other related sectors.
When selling their services, some investment advisers and research analysts utilise their brand name, trade name, or logo more prominently than their name, as it is registered with SEBI in their advertisements, websites, publications, client correspondence, and other documentation. The brand name, trade name, or logo may or may not be connected to the name of the IA or RA as registered with SEBI, which could mislead and create confusion in the minds of investors.
While IA and RA may use the brand name, trade name, or logo, they must make the following provisions to ensure that such use is transparent:
According to the directive published on April 5, IAs and RAs refrain from making untrue, misleading, biased, or deceptive statements based on projections or assumptions.
Some of the disclosures in the advertisement are:
These rules will be in effect as of May 1, 2023. The Securities and Exchange Board of India Act, 1992, Section 11(1)[1], which gives SEBI the responsibility to safeguard investor interests, encourage the growth of the securities market, and regulate the market appropriately, is the legal basis for the issuance of the circular. This circular can be seen in the “Legal Circulars” section of the SEBI website at www.sebi.gov.in.
Also Read:Advertisement Code for Investment Advisers (IA) and Research Analysts (RA)SEBI Research Analyst Registration: Eligibility Requirements and Procedure
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