Description

SEBI imposes penalties on Research Guru (INA000005507) and its associates for multiple violations of Investment Adviser Regulations including fraudulent practices, unauthorized operations, and code of conduct breaches.

Summary

SEBI has issued Adjudication Order No. Order/SM/SM/2025-26/31989-31990 against Research Guru (Investment Adviser Registration No. INA000005507), its proprietor Mrs. Veena Sharma, and Mr. Abhishek Sharma under Section 15-I of SEBI Act, 1992. The order follows a surprise inspection conducted from July 14-18, 2022, revealing that the registered proprietor never visited the office and operations were illegally run by Mr. Abhishek Sharma, who allegedly distributed franchisees allowing unregistered entities to conduct investment advisory activities.

Key Points

  • SEBI received complaint from former employee alleging unethical practices by Research Guru
  • Proprietor Mrs. Veena Sharma allegedly never visited office since obtaining registration
  • Entire operations were carried out by Mr. Abhishek Sharma (PAN: BOKPS5331D) who was not registered
  • Mr. Sharma allegedly distributed franchisees to allow unregistered entities to carry out investment advisory activities
  • Connection revealed during Capital Vista hearing where it was stated Mr. Abhishek Sharma was running investment advisory in name of Research Guru
  • Surprise inspection conducted at registered office from July 14-18, 2022 for period from April 1, 2021 onwards
  • Two noticees charged: Research Guru/Mrs. Veena Sharma (PAN: CCCPS4149A) and Abhishek Sharma (PAN: BOKPS5331D)

Regulatory Violations Charged

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, 2, 3, 4, 5, 6, 7, and 8 under Third Schedule (Code of Conduct for Investment Advisers) 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 officer is actively involved in operations
  • Only registered persons can conduct investment advisory activities
  • Franchisee model for distribution of investment advisory services through unregistered entities is prohibited
  • Investment Advisers must maintain proper books of accounts and records
  • Adherence to Code of Conduct for Investment Advisers is mandatory
  • Operations must comply with registration conditions and regulatory requirements

Important Dates

  • Inspection Period Coverage: April 1, 2021 onwards
  • Capital Vista Hearing: July 11, 2022
  • Surprise Inspection Conducted: July 14-18, 2022
  • Adjudication Order No.: Order/SM/SM/2025-26/31989-31990
  • Circular Publication Date: January 27, 2026

Impact Assessment

This enforcement action highlights SEBI’s strict monitoring of investment advisers and zero tolerance for fraudulent operations. The case demonstrates serious violations where a registered IA operated as a front while an unregistered person controlled operations and allegedly franchised the registration to other unregistered entities. This impacts investor protection as clients believed they were dealing with a SEBI-registered adviser when actual operations were conducted by unregistered persons. Market participants should note that SEBI actively investigates complaints and conducts surprise inspections. Investment advisers must ensure compliance with registration requirements and that only authorized persons provide advisory services. The case serves as a warning against proxy operations and franchisee models in investment advisory business.

Impact Justification

High severity enforcement action against specific investment adviser for serious violations, but limited market-wide impact as it affects only clients of this particular IA