Description

SEBI imposes adjudication proceedings against Dwaith Advisory Private Limited for charging fees beyond prescribed limits under Investment Advisers Regulations, related to advisory services during investigation of RVNL scrip.

Summary

SEBI’s Adjudicating Officer issued Order No. Order/AK/GN/2026-27/32407 against Dwaith Advisory Private Limited (PAN: AAGCD9549J) for violating SEBI (Investment Advisers) Regulations, 2013 by charging fees in excess of prescribed limits. The violations were identified during an investigation into the scrip of Rail Vikas Nigam Ltd (RVNL) for the period December 15, 2023 to February 20, 2024.

Key Points

  • Dwaith Advisory Private Limited charged fees beyond the limits prescribed under IA Regulations
  • Violations pertain to Clause 2(iii) of SEBI Circular SEBI/HO/IMD/DF1/CIR/P/2020/182 dated September 23, 2020
  • Also in violation of Guideline 1(iii) of SEBI Master Circular for Investment Advisers dated June 27, 2025
  • Regulations 15A, 15(9) and Schedule III (Code of Conduct Clause 6) of IA Regulations were allegedly breached
  • Noticee claimed client (Mr. Sunil) was an accredited investor with large corpus, justifying performance-based fees
  • Noticee also cited the SEBI Circular dated December 21, 2021 on accredited investor framework, arguing bilateral fee agreements are permissible
  • Noticee subsequently obtained a PMS license and continued relationship with client under that structure

Regulatory Changes

No new regulatory changes introduced. This order applies existing provisions of SEBI (Investment Advisers) Regulations, 2013 and relevant circulars governing the fee structure for registered investment advisers.

Compliance Requirements

  • Registered Investment Advisers must strictly adhere to fee caps prescribed under IA Regulations and SEBI circulars
  • Performance-based or excess fees are not permissible unless explicitly allowed under the accredited investor framework with proper documentation
  • IAs must maintain fee structures compliant with Regulation 15A and 15(9) of IA Regulations
  • Code of Conduct obligations under Schedule III, Clause 6 of IA Regulations must be followed at all times

Important Dates

  • Investigation Period: December 15, 2023 – February 20, 2024
  • Adjudicating Officer Appointed: December 23, 2025
  • Show Cause Notice Issued: February 04, 2026
  • Noticee Reply Submitted: February 11, 2026
  • Hearing Date: March 05, 2026
  • Order Date: May 2026

Impact Assessment

This order has limited direct market impact as it targets a single investment adviser entity. However, it reinforces SEBI’s enforcement posture on fee compliance for registered investment advisers. Firms relying on accredited investor exemptions for higher or performance-linked fees should ensure proper documentation and bilateral agreements as required under the December 2021 SEBI circular. The case highlights scrutiny of IA fee practices identified incidentally during broader scrip investigations.

Impact Justification

Enforcement action against a single registered investment adviser for fee cap violations; limited broader market impact but relevant to IA compliance practices