Description
SEBI imposes penalties on research analyst Kumar Venkataramegowda Santhosh for providing return assurances, advertising past performance, and mis-selling practices.
Summary
SEBI issued an adjudication order against Streetgains Research Services (Proprietor - Kumar Venkataramegowda Santhosh), a registered research analyst, for multiple regulatory violations discovered during inspection covering April 2022 to March 2024. The violations include providing return assurances to clients, advertising past performance on social media, and encouraging sale of unsuitable products through sales incentives.
Key Points
- Research analyst registration number: INH200003208, registered since June 30, 2016
- Inspection conducted on March 15, 2024 for period April 1, 2022 to March 14, 2024
- Three main violations identified: return assurances, performance advertising, and mis-selling
- Noticee failed to exercise due diligence over employees engaging with clients
- Violations span across PFUTP Regulations, SEBI Act, and Research Analyst Regulations
Regulatory Changes
No new regulatory changes introduced. Order enforces existing regulations under:
- SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003
- SEBI (Research Analysts) Regulations, 2014
- SEBI Circular dated April 5, 2023 and Master Circular dated May 21, 2024
Compliance Requirements
- Research analysts must not provide assurances of returns or loss recovery to clients
- Prohibition on advertising past performance of research calls on social media
- Due diligence required in supervising employees and sales practices
- Products recommended must suit client risk profiles
- Adherence to code of conduct specified in Third Schedule of RA Regulations
Important Dates
- Inspection Date: March 15, 2024
- Inspection Findings Communication: April 5, 2024
- Noticee Response: April 11 and April 18, 2024
- Adjudication Order Date: July 31, 2025
- Order Number: Order/JS/YK/2025-26/31573
Impact Assessment
This enforcement action reinforces SEBI’s commitment to protecting investors from fraudulent research practices. It serves as a warning to research analysts about strict compliance with advertising restrictions and client suitability requirements. The order may lead to increased scrutiny of research analyst operations and client interaction practices across the industry.
Impact Justification
Enforcement action against individual research analyst for multiple regulatory violations including fraudulent practices