Description

SEBI order suspending registration of Investment Adviser Winway Research (INA000007492) for violations including unauthorized fee collection, improper payment practices, and non-compliance with registration requirements.

Summary

SEBI has issued an order under Section 12(3) of the SEBI Act, 1992 against Winway Research (Proprietor: Mr. Ankur Jain), a registered Investment Adviser (Registration No. INA000007492). The order follows an enquiry report dated November 18, 2024, investigating complaints filed on the SCORES portal. The noticee was found to have violated multiple provisions of SEBI (Investment Advisers) Regulations, 2013, SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, and related circulars.

Key Points

  • Investment Adviser Winway Research (INA000007492) found in violation of multiple SEBI regulations
  • Failed to apply for registration as a non-individual Investment Adviser despite regulatory requirements
  • Accepted payments from clients’ relatives’ bank accounts and used multiple personal accounts belonging to other persons
  • Charged duplicate fees from client Mr. Shyam Kumar Kandukuri for the same product during overlapping periods
  • Issued invoices for payments not mentioned in client agreements
  • Failed to enter into proper agreements with clients for various fees charged
  • Proceedings initiated based on complaints received on SCORES portal
  • Enquiry Report submitted by Designated Authority on November 18, 2024

Regulatory Changes

This order reinforces existing regulatory requirements rather than introducing new changes. It emphasizes:

  • Strict compliance with registration requirements under SEBI Circular SEBI/HO/IMD/DF1/CIR/P/2020/182 dated September 23, 2020
  • Mandatory adherence to Code of Conduct for Investment Advisers (Third Schedule of IA Regulations)
  • Proper payment collection mechanisms through authorized channels only
  • Transparent fee disclosure and agreement requirements

Compliance Requirements

For Investment Advisers:

  1. Must apply for appropriate registration category (individual vs non-individual) as per paragraph 2(v)(a) and 2(v)(c) of the 2020 Circular
  2. Must accept payments only through proper channels, not from third-party or relatives’ accounts (Regulation 3(d), 4(1), and 4(2)(o) of PFUTP Regulations)
  3. Must maintain proper fee structures without charging duplicate fees for overlapping service periods (Regulation 15(1) and (9) of IA Regulations)
  4. Must enter into written agreements with clients clearly mentioning all fees and charges (Regulation 19(1)(d) of IA Regulations)
  5. All invoices issued must correspond to terms mentioned in client agreements (Paragraph 2(ii)(a) and 2(ii)(c) of 2020 Circular)
  6. Must comply with Clause 1, 2, 6, and 8 of Code of Conduct for Investment Advisers

Important Dates

  • November 18, 2024: Enquiry Report submitted by Designated Authority
  • January 27, 2026: SEBI order issued (WTM/AS/WRO/WRO/31986/2025-26)

Impact Assessment

Market Impact: Limited direct market impact as this affects a single Investment Adviser firm.

Investor Impact:

  • Clients of Winway Research may face service disruption depending on regulatory action taken
  • Strengthens investor protection framework by demonstrating SEBI’s enforcement capabilities
  • Sets precedent for compliance expectations from all registered Investment Advisers

Regulatory Impact:

  • Reinforces importance of proper registration classification for Investment Advisers
  • Highlights SEBI’s focus on transparent fee structures and payment mechanisms
  • Demonstrates effectiveness of SCORES portal in identifying and addressing investor grievances
  • May lead to increased scrutiny of other Investment Advisers’ operational practices

Industry Impact:

  • Serves as warning to Investment Advisers regarding compliance with registration and operational requirements
  • Emphasizes need for proper documentation and agreement frameworks
  • Reinforces prohibition against fraudulent and unfair trade practices in advisory services

Impact Justification

Affects specific investment adviser and their clients. Limited broader market impact but important for investor protection and regulatory compliance standards.