Securities and Exchange Board of India Issues Advertisement Code for Investment Advisers and Research Analysts

In a proactive move to safeguard the interests of investors in the Indian securities market, the Securities and Exchange Board of India (SEBI) has recently introduced a comprehensive Advertising Code for Investment Advisors (IA) and Research Analysts (RA) [1]. Through this circular, dated April 2023, SEBI aims to bolster the existing code of conduct under the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013, and Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The Code, effective from May 1, 2023, is applicable to all forms of communication employed by or on behalf of IAs and RAs that could potentially influence investors’ decisions.

Enhanced Disclosure Requirements

Under the newly issued Advertising Code, SEBI has introduced enhanced disclosure requirements to ensure transparency and provide investors with vital information regarding the IA/RA. All advertisements must prominently feature the following details:

Registered Office Address: The address of the IA/RA’s registered office must be clearly stated in the advertisement, which will help investors identify the physical location of the IA/RA and establish a level of trust.

SEBI Registration No.: Every IA/RA must possess a SEBI registration number, which needs to be prominently displayed in all advertisements. This requirement will enable investors to verify the authenticity and legitimacy of the IA/RA.

Logo/Brand Name/Trade Name: Advertisements should include the logo, brand name, or trade name of the IA/RA, so as to enable the investors to differentiate the IA/RA from others in the market.

CIN (Corporate Identification Number): If applicable, the CIN of the IA/RA should be mentioned in the advertisement to aid investors in identifying the legal entity behind the IA/RA.

In cases where SMS messages or certain platforms such as social media restrict detailed information, an official website hyperlink containing all the above details should be provided.

Clear Disclaimers to Protect Investors

A standard warning of “Investment in securities market are subject to market risks. Read all the related documents carefully before investing” must be given, without any modification. In case of an AV commercial, the written warning must be accompanied by a voice over.

Further, SEBI’s Advertising Code emphasizes the inclusion of clear disclaimers to protect investors and manage their expectations. Advertisements and communications with clients must feature a disclaimer stating, “Registration granted by SEBI, membership of BASL (in the case of IAs), and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.” This disclosure reinforces SEBI’s commitment to transparency and shields investors from any misplaced expectations or false promises.

Compliance with Advertising Standards

Advertisements should not contain statements which are false, misleading, biased or deceptive, based on assumptions or projections, exaggerated or inconsistent with or unrelated to the nature and risk and return profile of the product, or discredit other advertisements or intermediaries or make unfair comparisons.

More importantly, extensive use of technical or legal terminology or complex language and the inclusion of excessive details which may distract the investors, is prohibited. Reference to any report, analysis, or service as free, unless it actually is free and without condition or obligation is also not allowed. Any promise or guarantee of assured or risk free return to the investors should not be advertised. Statements relating to past performance of the IA/RA are not allowed either.

Moreover, advertisements must be consistent with the nature and risk and return profile of the product being advertised. Superlative terms that endorse the quality or standing of the IA/RA, such as “Best,” “No. 1,” “Top Adviser/Research Analyst,” “Leading,” “One of the best amongst market leaders,” etc., are not permitted. However, factual details of awards received by the IA/RA from independent organizations may be included to provide investors with credible information.

Prohibition on Unauthorized Activities

SEBI’s Advertising Code imposes strict restrictions on unauthorized activities by IAs and RAs. Advertisements should not promote or engage in games, leagues, schemes, competitions, etc., that involve the distribution of prize money, medals, or gifts. This prohibition safeguards investors from potential conflicts of interest and ensures that investment advice remains unbiased and objective.

Prior Approval Requirement

To maintain regulatory oversight, the Advertising Code mandates that advertisers obtain prior approval from a SEBI-recognized supervisory body, such as BSE Administration & Supervision Ltd. (BASL) for IAs, before releasing advertisements.

Retention of Advertisements

In line with SEBI’s objective to monitor compliance and take appropriate action against violations, IAs and RAs are required to retain a copy of each advertisement for a period of five years. This provision facilitates regulatory scrutiny and helps protect investors’ interests.

Recent Enforcement Actions

In a significant and one of the first enforcement action, SEBI penalized and barred PR Sundar, against whom, multiple complaints were issued claiming that he ran a website through which he offered various packages to provide investment advice, including purchasing, selling and dealing in securities, which was communicated to the clients, without obtaining the requisite registration from the regulator. The Finfluencer- P R Sundar, is a renowned YouTuber and options trader. He was barred from trading for one year over alleged violation of investment advisor norms. [3]

This action serves as a strong message from SEBI that unregistered advisors will face consequences for non-compliance with the Advertising Code.

Recently, Finance Minister, Nirmala Sitharaman also expressed concern about Ponzi apps and noted that though there is currently no proposal to regulate “FinFluencers” a word of caution is essential. “If there are three or four people giving us very objective, good advice, there are seven others out of 10 who are probably driven by some other considerations,” she said. [3]


The introduction of SEBI’s Advertising Code for Investment Advisors and Research Analysts marks a significant stride in safeguarding investor interests in the Indian securities market. By imposing stringent regulations and guidelines on advertisements, SEBI aims to protect investors from fraudulent practices and ensure transparency in the financial ecosystem.

Compliance with the Advertising Code will not only protect investors but also enhance the credibility and trustworthiness of investment advisors and research analysts operating in India’s securities market.





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