Description

SEBI adjudication proceedings against Research Guru and its associates for multiple violations including unauthorized franchising of investment advisory services, fraudulent practices, and non-compliance with IA Regulations.

Summary

SEBI has issued Adjudication Order No. Order/SM/SM/2025-26/31989-31990 against Research Guru (Proprietor: Mrs. Veena Sharma, Registration No. INA000005507) and Mr. Abhishek Sharma under Section 15-I of SEBI Act, 1992. The proceedings were initiated following a complaint from a former employee and subsequent surprise inspection conducted during July 14-18, 2022, revealing that the registered proprietor never visited the office and actual operations were run by Mr. Abhishek Sharma, who was distributing franchises to allow unregistered entities to conduct investment advisory activities.

Key Points

  • Noticee 1: Research Guru, Proprietor - Mrs. Veena Sharma (PAN: CCCPS4149A, Registration: INA000005507)
  • Noticee 2: Abhishek Sharma (PAN: BOKPS5331D)
  • Complaint received from former employee alleging unethical practices
  • Proprietor Mrs. Veena Sharma allegedly never visited office after obtaining registration
  • Mr. Abhishek Sharma identified as actual operator running entire business
  • Unauthorized franchising scheme allowing unregistered entities to provide investment advisory services
  • Connection to Capital Vista case where Mr. Abhishek Sharma was identified as actual person behind operations
  • Surprise inspection conducted at registered office for period from April 1, 2021 onwards
  • Inspection period: July 14, 2022 to July 18, 2022

Regulatory Violations Alleged

Under Section 15A(a) of SEBI Act, 1992:

  • Violation of Regulation 15(12) of SEBI (Investment Advisors) Regulations, 2013

Under Section 15EB of SEBI Act:

  • Violation of Regulation 15(1) and clauses 1-8 of Third Schedule (Code of Conduct) read with Regulation 15(9) of IA Regulations, 2013
  • Violation of Schedule II of SEBI (Intermediaries) Regulations, 2008 read with Regulation 7(2)(e)
  • Violation of Regulations 3(a), (c), (d) and 4(2)(o) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 read with Sections 12A(a), (b), (c) of SEBI Act
  • Violation of Regulation 7 of IA Regulations, 2013
  • Violation of Regulations 13(a) and 13(b) of IA Regulations, 2013
  • Violation of Regulation 15(12) of IA Regulations, 2013
  • Violation of Regulations 16 and 17 of IA Regulations, 2013
  • Violation of Regulation 18(1) of IA Regulations, 2013

Compliance Requirements

  • Investment advisers must ensure proprietor/principal officers are actively involved in operations
  • Prohibition on franchising or allowing unregistered entities to conduct investment advisory activities
  • Strict adherence to Code of Conduct under Third Schedule of IA Regulations
  • Compliance with record-keeping and operational requirements under IA Regulations
  • Prevention of fraudulent and unfair trade practices
  • Proper adherence to intermediary regulations

Important Dates

  • Inspection Period Coverage: From April 1, 2021 onwards
  • Surprise Inspection: July 14, 2022 to July 18, 2022
  • Capital Vista Hearing: July 11, 2022
  • Adjudication Order Publication: January 27, 2026

Impact Assessment

This enforcement action highlights SEBI’s strict monitoring of registered investment advisers and zero-tolerance approach toward fraudulent operations. The case demonstrates serious concerns about front-running registrations where actual operations are conducted by unauthorized persons. The alleged franchising model poses systemic risks by allowing unregistered entities to provide investment advisory services under cover of legitimate registration. This action serves as a warning to all registered intermediaries to ensure compliance with operational requirements and prevent misuse of registration credentials. Investors should verify that investment advisers are operating in accordance with their registration and that authorized persons are actually managing the advisory services.

Impact Justification

High severity enforcement action against registered investment adviser for serious regulatory violations including fraudulent operations and unauthorized franchising, but impact limited to specific intermediary rather than broad market effect.