Note: It’s a little lengthy article, and hence I have divided the article in two parts for the ease of your reading.
You are reading Part-I of the article. Link to Part-II is provided at the end of this article.
On 5th April, 2023, SEBI had issued a circular introducing the advertisement code for Investment Advisers and Research Analyst. It went on to specify that the SEBI registered Investment Advisers (RIAs) has to go one step ahead and take approval from BASL before advertising any content.
BASL has further issued a detailed guideline on how shall the RIAs take approval and timelines etc.
In this article, we will discuss about the steps RIAs should follow to obtain approvals etc.
Here we go,
SEBI has already specified that anything that has the power to influence the decision of the investors/ prospective investors will be deemed advertisement, irrespective of it being an internal communication.
I have written an article on the advertisement code issued by SEBI. Click Here.
Definition of Advertisement:
“Forms of communications to which the present Advertisement Code shall be applicable, shall include pamphlets, circulars, brochures, notices, research reports or any other literature, document, information or material published, or designed for use in any publication or displays (such as newspaper, magazine, sign boards/hoardings at any location), in any electronic, wired or wireless communication (such as electronic mail, text messaging, messaging platforms, social media platforms, radio, telephone, or in any other form over the internet) or over any other audio-visual form of communication (such as television, tape recording, video tape recordings, motion pictures, etc.) or in any other manner whatsoever."
It has further clarified that social media platforms shall include but not limited to Facebook, Twitter, Instagram, YouTube, WhatsApp, etc.
So, in my view, every possible mode of communication is covered under the definition of advertisement.
Let’s deep dive into the broad guidelines by BASL:
1. Any advertisement should be issued/published only after the approval by BASL.
2. Any Authorised Persons/ Business Partner/ Channel Partner of the RIAs or influencer/ bloggers who is being paid in any manner directly or indirectly shall obtain prior approval from BASL. BASL shall not entertain advertisement approval request from any Associated Persons. Further, the RIAs will have to frame an internal policy/ framework to ensure that the code and guideline is being complied with.
3. RIAs will have to ensure that the content being issued as advertisement adheres to the code and guideline and prior approval has been duly obtained. The information contained in the advertisement should be accurate, complete and unambiguous.
4. Where BASL/ SEBI has suspended any RIAs for any period of time, those RIAs shall not advertisement either singly/jointly in association with any other RIAs during the period of such suspension. Further, BASL reserves the right to refrain any RIA from issuing any advertisement.
5. Now this is something new-
Where the RIAs wishes to promote for the mobile application irrespective of accounts being opened or product/services information is displayed, prior approval from BASL will be required.
6. Where any third party has issued any advertisement without the consent of the RIAs, then the RIAs will have to inform BASL about it and will have to take necessary legal action against it.
All that should be in your Advertisement:
1. Your complete details- Name, registered office address, SEBI registration no./ membership ID allotted by BASL, logo/ brand name/ trade name (if any), CIN no. (if applicable). Where the form of advertisement is SMS/ Message/ Pop-up, social media and these details are not provided along with standard warning, then the RIAs must share the official website hyperlink containing such information.
2. Standard Warning (minimum font size shall be 10)- ‘Investment in securities market are subject to market risks. Read all the related documents carefully before investing.’ The audio-visual media based advertisement should be audible in clear and understandable manner.
Where the warning is being issued in language other than English, it should be translated accurately.
3. Where the advertisement contains details about other business activity like mutual funds, IPO, Insurance, Commodities, Bonds, Loans etc. SEBI registration no. has to be mentioned wherever applicable. In case you are the only distributor of any products mentioned in the advertisement, then proper disclaimer has to be given by the you.
4. If you have displayed any specific security in the advertisement then the disclaimer stating “The securities quoted are for illustration only and are not recommendatory” shall be mentioned in the same slide of the content. However, you are restricted to use the logo of the securities as an advertisement.
5. If you are issuing any statistical information, charts, graphs, etc. then it should be supported by the source (be it having certified by a practicing professional or any authentic verifiable source). Further, if the advertising claims are expressly based on independent research or assessment, then authentic source of it along with time period it relates to has to be mentioned in the advertisement.
6. Every advertisement or communications with the clients shall include a disclaimer: “Registration granted by SEBI, membership of BASL and certification from National Institute of Securities Markets (NISM) in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.
7. You shall not display the name and logo of BASL anywhere in the advertisement.
A “BIG NO” for your advertisement:
1. Any content that is prohibited under the law and is false, misleading, biased, exaggerated, ambiguous and are based on assumptions or projections or is designed to exploit the lack of experience or knowledge of the investors/prospective investor.
2. Any deceptive or misleading testimonials.
3. Any statement that may mislead the investor/ prospective investor or likely to disguise the significance of it or is exaggerated and is inconsistent with or unrelated to the nature and risk and return profile of the product.
4. Too much of use of technical or legal terms or complex language and giving too much of details that may confuse or distract the investors.
5. NO TERMS AND CONDITIONS shall be applied if you have offered any particular report, analysis or services for free.
6. You shall not make any promise or give any assurance, guarantee for risk free return. Further, your advertisement should not give the impression that the investment advice is risk free and/ or susceptible to market risks and/ or that it can generate returns with any level of assurance.
7. Any content that discredits the other advertisements/ intermediaries or make unfair comparisons etc. The advertisement should not imitate advertisement by other RIAs.
8. You are not allowed to give reference to your past performance including any recommendation/ promotion of a specific investment/script/ contract in any manner.
9. You can display any factual details of awards received by you, however, you shall not use superlative terms like “ Best”, “No. 1”, “Top Adviser”, “Leading”, One of the best among the market leaders” etc.
10. You cannot advertise through following category celebrities:
any top 50 ranking celebrity as per the index published by a national publication of repute. The index should be latest or a year old.
who has played a lead role in mainstream prominent/ movies/ TV serials/ TV shows/ web-series or any OTT platforms.
who is an influencer with more that 10 lacs followers/ subscribers in per social media handle.
any sports person who has been part of the national team of the country to which he belongs or has represented his country in any international tournaments or events.
who has been an anchor or host in any TV programs.
winner or runners up of any prominent/ popular competitive program aired in OTT/ TV platform or any prominent personality who has gone through a series of qualifying rounds.
virtual characters that have an influence on their audience/ followers.
who in view of BASL is capable of influencing the opinion of the viewers of advertisement.
BASL further took the discretion in their hands to decide if a person being part of the advertisement is a celebrity or not.
11. You or along with any associated person/ associates/ channel partners/ influencers/ bloggers should not give any incentive or referral schemes, by whatever name called to your clients for opening investment advisory account or for a downloading mobile application. Further, you shall not offer any scheme or plan to influence them to take your investment advisory services.
12. You shall not participate directly or indirectly in kind of scheme/ league/ competition/quiz/ game/ lottery/ engagement programs etc. with general public or clients that involves money, certificates, medals, gifts, prize, coupons, tokens etc. or any other form and has the capacity to induce the investor promote their brand.
Further, where any third party is involved in any of the above, you are restricted to give the details of your clients, even though you have their consent and no reference of your logo, name etc. shall be made in any scheme/leagues/competition etc including any financial liability in this regard.
13. You are restricted to recommend words like BTST (Buy Today and Sell Tomorrow), ATST (Acquire Today and Sell Tomorrow) etc. in your advertisement.
14. You are not suppose to use the logos of other entities unless you have taken approval from such entities and the same is disclosed to BASL prior to using the same.
Hope this article is helpful to you and resolves your query. If you have any specific query around it, please write to me at firstname.lastname@example.org or reach out to me at 9148973085.