Sebi slaps Rs 20 lakh fine on SIMR for flouting regulatory norms

PTI, Aug 24, 2023, 5:08 PM IST

Capital markets regulator Sebi has levied a fine of Rs 20 lakh on Star India Market Research for allegedly flouting regulatory norms.

Star India Market Research (SIMR) is a Sebi-registered investment adviser.

The Securities and Exchange Board of India (Sebi) conducted an examination of SIMR before issuing a show cause notice on July 11, 2023, for alleged violations. In its 52-page order on Wednesday, Sebi found that SIMR charged arbitrary fees from clients, sold multiple products in a short span to the same client and also sold products for overlapping periods. This was done to defraud clients and earn maximum fees, the order said, adding that the noticee did not act honestly, fairly, and diligently in the best interests of its clients, thereby violating the code of conduct of Investment Advisers (IA) regulations. Further, Sebi observed that SIMR induced its clients to trade in the market, contravening the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules.

”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,” Sebi’s Adjudicating Officer Amit Kapoor said in the order.

In addition, 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, the order said. Sebi also found that the noticee was supposed to carry out the risk profiling of the client for ascertaining the client’s risk tolerance, income, loss absorbing capacity, capacity of accepting loss of capital, liabilities/borrowings, etc. However, it failed to do the same, resulting in violation of provisions of IA rules, Sebi said.