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CS Professional · Strategic Management and Corporate Finance · Role of Intermediaries in Fund Raising

Rohit Mehta, an individual, wishes to provide paid investment advice to clients on securities. Which registration is required under SEBI regulations, and what is the key conduct feature that distinguishes it from distribution?

Paid investment advice needs registration as an Investment Adviser with SEBI. The adviser charges fees from the client and must keep advisory separate from distribution, so no commission is earned from products sold to the same client. Brokers, merchant bankers and research analysts have different roles.

  1. ARegistration as an Investment Adviser; advice is given for a fee and the adviser must not earn distribution commission on the same clientCorrect
  2. BRegistration as a Research Analyst; advice is given only as free tips on a website
  3. CRegistration as a Merchant Banker; advice is linked to underwriting commission
  4. DRegistration as a Stock Broker; advice is linked to brokerage on every trade

Explanation

Investment advice for consideration requires registration as an Investment Adviser under the SEBI (Investment Advisers) Regulations, 2013. Advisory and distribution activities for the same client are kept separate, so an adviser cannot take commission on that client's products. The other options relate to different intermediaries.

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