Description
SEBI disposes enquiry proceedings against Investment Adviser without adverse action after investigating alleged arm's length violations.
Summary
SEBI has disposed of enquiry proceedings against Manoj Jethanand Varyani, Proprietor of Smart Financial (Registration No. INA000015419), without any adverse action. The investigation examined alleged violations of arm’s length requirements between investment advisory activities and other business operations during April 2022 - July 2023.
Key Points
- Noticee held individual proprietorship IA registration while functioning as director (70% shareholding) of another registered IA entity
- Served as Principal Officer in both Smart Financial and Bestway Smart Financial Private Limited
- SEBI inspection conducted on August 18, 2023 for period April 1, 2022 - July 31, 2023
- Show cause notice issued on July 12, 2024 under Regulation 25(1) of Intermediaries Regulations
- Designated Authority recommended disposal without adverse action on February 28, 2025
Regulatory Changes
No regulatory changes introduced. Case represents enforcement of existing Investment Advisers Regulations, 2013 regarding arm’s length requirements.
Compliance Requirements
Investment Advisers must maintain arm’s length distance between investment advisory activities and other business activities as per Regulation 15(3) of IA Regulations, 2013.
Important Dates
- Inspection Period: April 1, 2022 - July 31, 2023
- SEBI Inspection: August 18, 2023
- Show Cause Notice: July 12, 2024
- Enquiry Report: February 28, 2025
- Order Date: July 31, 2025
Impact Assessment
Minimal market impact as proceedings concluded without adverse action. Case provides clarity on enforcement approach for arm’s length violations in investment advisory services. No penalties imposed on the noticee.
Impact Justification
Case disposed without adverse action, limited market impact