Description

SEBI imposes penalties on Trade Nexa Research Investment Advisor for charging fees without agreements and providing assurances of returns to clients.

Summary

SEBI has issued an adjudication order against Trade Nexa Research Investment Advisor (Proprietor: Minakshi Asavani) for multiple violations of Investment Adviser Regulations. The violations include charging fees without proper agreements, providing assurances of returns to clients, and failing to maintain call records during the inspection period from April 2020 to December 2023.

Key Points

  • Trade Nexa Research Investment Advisor (Registration: INA000009083) violated SEBI regulations during 2020-2023
  • Charged fees without agreement in 74 instances and before entering into agreement in 15 instances
  • Failed to maintain call recording records as required
  • Provided assurances of returns and loss recovery to clients
  • Engaged in mis-selling of investment advisory services
  • Show Cause Notice issued on January 16, 2025

Regulatory Changes

This order reinforces existing compliance requirements under SEBI (Investment Advisers) Regulations, 2013, particularly regarding proper agreement execution before fee collection and prohibition of return guarantees.

Compliance Requirements

  • Investment advisors must enter into written agreements before charging any fees
  • Maintain proper call recording systems for client interactions
  • Avoid providing any assurance of returns or loss recovery to clients
  • Ensure transparent fee structure and timing of fee collection
  • Comply with SEBI circular requirements on investment advisory practices

Important Dates

  • Inspection Period: April 1, 2020 to December 31, 2023
  • Inspection Start: March 5, 2024
  • Show Cause Notice: January 16, 2025
  • Adjudicating Officer Appointment: December 19, 2024

Impact Assessment

This enforcement action serves as a warning to the investment advisory industry about strict compliance with fee collection procedures and client communication standards. It emphasizes SEBI’s focus on protecting retail investors from misleading practices and ensures proper documentation in advisory relationships.

Impact Justification

Regulatory enforcement action against investment advisor affecting industry compliance standards