SEBI Imposes Rs 20 Lakh Fine On SIMR For Violating Regulatory Norms

SEBI in it’s investigation found that SIMR levied arbitrary fees on clients, sold multiple products in a short span to the same client, and also sold products for overlapping periods.

SEBI also stated that SIMR violated the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules by inducing clients to trade in the market. 

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The Securities and Exchange Board of India (SEBI) imposed a fine on Star India Market Research (SIMR) for flouting regulatory norms. The market regulator levied a Rs 20 lakh fine on SIMR alleging that the investment advisor has violated the norms. 

According to a PTI report, SIMR, registered with SEBI, was issued a show-cause notice by the regulator on July 11. The market regulator undertook an examination of the investment agency before issuing the notice with regard to the alleged violations. 

The report added that SEBI in it’s investigation found that SIMR levied arbitrary fees on clients, sold multiple products in a short span to the same client, and also sold products for overlapping periods. The regulator noted that this was done to defraud clients and earn maximum fees. It further added that the investment advisor did not function with honesty and diligence with regard to the client’s best interests, and in turn, violated the code of conduct of Investment Advisers (IA) regulations. 

SEBI also stated that SIMR violated the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules by inducing clients to trade in the market. 

SEBI’s Adjudicating Officer Amit Kapoor noted in the order, “I note that there were 24 unique complaints pending against the noticee (SIMR). The said complaints were forwarded to the noticee by Sebi, however, it failed to redress the complaints, and did not file ATR (Action Taken Report). By failing to redress the complaints it is established that the noticee has violated the provisions of IA Regulations.”

The market watchdog addressed the noticee and added, “The noticee did not submit accurate facts to the capital markets watchdog at the time of seeking registration as an IA and it was not appropriately qualified to seek registration,” as cited in the report. 

SEBI also stated that SIMR violated further provisions of IA rules by not conducting proper risk profiling of the clients to establish their risk tolerance, income, loss-absorbing capacity, liabilities, and other details.