Mumbai, Nov 12 (IANS) Regulatory actions by the Securities and Exchange Board of India (SEBI) in the investment advisory space overwhelmingly concentrate on entities dealing in speculative trading calls, rather than those offering long-term fiduciary investment advice, a new report said on Wednesday, analysing enforcement data.

Cumulative data since the inception of the SEBI (Investment Advisers) Regulations in 2013 until March 31, 2025, showed that of the 218 enforcement orders passed, a significant 67 per cent, or 147 orders, were against unregistered entities, all of whom were trading call providers.

Furthermore, of the 71 orders against registered entities, 65 orders (92 per cent) were against registered trading call providers, entities engaged in intraday, derivatives, or stock-tipping activities, the Association of Registered Investment Advisers (ARIA) said in its SEBI orders analysis report.

Only 6 orders, a mere 8 per cent of actions against registered entities and less than 3 per cent of all enforcement since 2013, were against registered investment advisers.

According to the report, the trend was amplified in the financial year 2024-25, where 50 enforcement orders were analysed, of which 31, nearly 62 per cent, were against unregistered entities and 15 or 30 per cent were against registered trading call providers.

The report stated that all six historical orders against Investment Advisers, including the four in the last fiscal, “relate to procedural or technical lapses such as incomplete documentation, KYC gaps, or reporting deficiencies. No case involved investor loss or misappropriation”. In contrast, actions against unregistered entities frequently involved directions for disgorgement of funds or asset-freezing, which were not levied on registered entities, the report noted.

“The analysis suggests that most of the enforcement under the IA Regulations has historically related to trading-call providers rather than fiduciary investment advisory services,” ARIA Chairperson Renu Maheshwari said.

“With trading-call providers now no longer eligible for registration as Investment Advisers, it may be timely for the regulatory focus to evolve—towards supporting genuine, client-centric fiduciary advice while streamlining compliance obligations designed for a different context,” she added.

The report also highlighted that the city of Indore accounted for 13 out of 50 orders (26 per cent) in FY 2024-25, making it the leading geography for penalised entities.

The primary mode of discovery for unregistered entities was public complaints, around 87 per cent, whereas actions against registered entities were predominantly initiated through SEBI inspections, almost 79 per cent.

The analysis, compiled in the “SEBI orders compilation and analysis report 2024-2025” by the ARIA, found that since the SEBI (Investment Advisers) Regulations came into force in 2013, a total of 218 enforcement orders have been issued.

–IANS

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