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

Mr. Rohan Mehta, a registered individual investment adviser, tells a client, 'This small-cap fund will definitely double your money in two years.' Which regulatory principle is MOST directly violated?

The principle violated is the prohibition on assuring or guaranteeing returns, together with the duty to give fair, honest and non-misleading advice. Investment returns in market-linked products are uncertain, so promising a doubling of money misrepresents risk to the client and breaches the adviser's code of conduct.

  1. AAdvice must be based on the client's tax bracket only
  2. BGuaranteeing or assuring returns is prohibited, and advice must be fair and not misleadingCorrect
  3. CAdvisers must only recommend debt products
  4. DAdvisers are required to disclose their income to clients on every call

Explanation

The Regulations and code of conduct bar advisers from guaranteeing or assuring returns and require fair, honest and non-misleading communication. Words like 'definitely double' breach this. The other options do not reflect actual requirements.

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