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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Key Regulations

An individual registered investment adviser also wishes to distribute mutual fund products to the same advisory client. Under the SEBI (Investment Advisers) Regulations, 2013, what is the position?

This is not permitted. Under the SEBI Investment Advisers Regulations, advisory and distribution activities must be segregated, so an adviser cannot sell distribution products to its own advisory client, even with disclosure of commission or client consent.

  1. APermitted if the commission is disclosed in writing to the client
  2. BPermitted for clients whose net worth exceeds Rs 5 crore
  3. CPermitted if the adviser takes the client's verbal consent
  4. DNot permitted; advisory and distribution services to the same client must be segregatedCorrect

Explanation

The regulations require segregation of advisory and distribution activities, so an adviser cannot provide distribution services to its advisory clients. Disclosure, verbal consent or client wealth does not remove this bar. Individual advisers must not offer distribution to the same advisory client, and family members' distribution services are also restricted for the client.

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