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

Mr. Raman Iyer, a registered investment adviser, also runs a distribution business through a group entity. Which approach is consistent with the SEBI (Investment Advisers) Regulations, 2013?

The regulations require client-level segregation of advisory and distribution activities. If a client takes investment advice from the adviser, the adviser and its group or family entities cannot provide distribution services to that same client, to avoid conflicts of interest.

  1. AOffer both advisory and distribution services to the same client through the group entity
  2. BOffer advisory services to a client and ask the client to buy products only from the group entity's distribution arm
  3. CKeep advisory and distribution activities segregated at the client level, so a client availing advice is not served for distribution by the same groupCorrect
  4. DProvide distribution to advisory clients if the commission is disclosed after the sale

Explanation

The Regulations require segregation of advisory and distribution activities at the client level for individual and group entities: a client availing investment advice cannot be given distribution services by the adviser or its group, and vice versa. Disclosure after the sale does not cure the conflict.

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