SEBI has tightened the reins on advisors who give investment advice without registration. The Securities and Exchange Board of India has issued a circular and directed all the institutions under its purview to end all their relations with such unregistered investment advisors or institutions that are making false claims of returns or giving investment advice. These institutions include stock exchanges, clearing corporations and depositories. This circular was issued on 22 October. The circular has instructed that all institutions should cancel all their contracts with such advisors within 3 months.
 

This decision has been taken after the SEBI board approved the new guidelines on 27 June 2024 and implemented it on 26 August 2024. The aim of the new rules is to rein in investment advisors who are not authorized to issue advice and protect the interests of common investors. According to the new rules, no one will be allowed to make any claim related to investment advice or performance without special permission from SEBI. The new rules prohibit institutions covered under SEBI rules from associating with investment advisors who are not approved to give advice. However, SEBI clarified that these rules will not apply to initiatives taken to educate investors. However, there will be a ban on giving advice directly or indirectly in these initiatives as well. SEBI also said that issues related to digital platforms will be resolved separately in this matter. Amid the boom in the stock market, an increasing number of retail investors have joined the market. However, there have been many incidents where common investors have suffered huge losses due to the advice of fraudsters. To curb such incidents, SEBI is making the rules for financial advisors stricter.