The Securities and Exchange Board of India (Sebi) conducted an examination of SIMR before issuing a show cause notice on July 11, 2023, for alleged violations.
Capital markets regulator Sebi has levied a fine of Rs 20 lakh on Star India Market Research for allegedly flouting regulatory norms.
Star India Market Research (SIMR) is a Sebi-registered investment adviser.
Read More: Centum Electronics Zooms 10% After Chandrayaan-3 Lands On Moon; Should You Buy?
The Securities and Exchange Board of India (Sebi) conducted an examination of SIMR before issuing a show cause notice on July 11, 2023, for alleged violations.
In its 52-page order on Wednesday, Sebi found that SIMR charged arbitrary fees from clients, sold multiple products in a short span to the same client and also sold products for overlapping periods.
This was done to defraud clients and earn maximum fees, the order said, adding that the noticee did not act honestly, fairly, and diligently in the best interests of its clients, thereby violating the code of conduct of Investment Advisers (IA) regulations.
Read More: Paytm Shares Hit 18-Month High As Bernstein Initiates Coverage With An ‘Outperform’ Rating
Further, Sebi observed that SIMR induced its clients to trade in the market, contravening the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules.
“I note that there were 24 unique complaints pending against the noticee (SIMR). The said complaints were forwarded to the noticee by Sebi, however, it failed to redress the complaints, and did not file ATR (Action Taken Report).
“By failing to redress the complaints it is established that the noticee has violated the provisions of IA Regulations,” Sebi‘s Adjudicating Officer Amit Kapoor said in the order.
Read More: Sewerage infra player EMS plans to float IPO in Sep to raise up to Rs 320 cr
In addition, the noticee did not submit accurate facts to the capital markets watchdog at the time of seeking registration as an IA and it was not appropriately qualified to seek registration, the order said.
Sebi also found that the noticee was supposed to carry out the risk profiling of the client for ascertaining the client’s risk tolerance, income, loss absorbing capacity, capacity of accepting loss of capital, liabilities/borrowings, etc.
However, it failed to do the same, resulting in violation of provisions of IA rules, Sebi said.
