Description

SEBI imposed sanctions on Research Analyst Parag Salot for mis-selling services, fraudulent fund collection, and multiple regulatory compliance failures.

Summary

SEBI has issued an order under Section 12(3) of the SEBI Act, 1992 against Research Analyst Parag Salot (Registration No. INH000000115) for multiple violations including fraudulent practices, mis-selling services, and regulatory non-compliance. The order follows an inspection conducted for the period April 1, 2022 to February 29, 2024.

Key Points

  • Research Analyst Parag Salot found guilty of mis-selling services and fraudulent fund collection
  • Violations include providing assured returns to clients and making false claims
  • Failed to maintain proper records of research recommendations
  • Did not conduct mandatory annual audits from FY 2014-15 to FY 2023-24
  • Failed to inform SEBI about change of office address
  • Provided false information about office locations for RA activities
  • Non-compliance with advertisement disclosure requirements
  • Failed to display investor charter and complaints on website
  • Conducted RA activities without valid NISM certification

Regulatory Changes

This order reinforces existing regulatory framework under:

  • SEBI (Research Analysts) Regulations, 2014
  • SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003
  • SEBI (Intermediaries) Regulations, 2008

Compliance Requirements

  • Research Analysts must maintain proper records of all recommendations
  • Mandatory annual audits must be conducted and submitted
  • Any change in office address must be intimated to SEBI
  • Accurate information about business locations must be provided
  • Advertisements must include RA name, registered office address, and SEBI registration number
  • Investor charter and complaint details must be displayed on websites
  • Valid NISM certification required for conducting RA activities
  • No assured returns or guaranteed profits can be promised to clients

Important Dates

  • Inspection Period: April 1, 2022 to February 29, 2024
  • Initial Registration: March 2, 2015
  • Inspection Findings Communicated: March 18, 2024
  • Noticee Response: March 25, 2024

Impact Assessment

This enforcement action serves as a strong deterrent to other Research Analysts regarding compliance with regulatory requirements. It highlights SEBI’s continued focus on protecting investor interests and maintaining market integrity. The comprehensive nature of violations demonstrates the importance of proper governance and compliance systems for intermediaries. Other Research Analysts should review their practices to ensure full regulatory compliance.

Impact Justification

High importance due to regulatory enforcement action; medium impact as it affects one intermediary and serves as industry warning