3 days ago
The Securities and Exchange Board of India (SEBI) has fined Basant Maheshwari Wealth Advisers LLP ₹4 lakh for violating investment adviser regulations.
Failure to comply could lead to recovery proceedings, including the attachment and sale of movable and immovable properties under Section 28A of the SEBI Act.
The firm allegedly charged advisory fees under both AUA-based and fixed-fee models and used exaggerated captions in its YouTube videos, violating SEBI’s advertising code.
SEBI has directed the firm to pay the penalty within 45 days of receiving the order.
SEBI’s inspection, conducted on December 29, 2023, covered the period October 19, 2023, to December 31, 2023.
The investigation highlighted two key violations:
Fee structure violation
The firm charged fees under both AUA-based and fixed-fee models from 32 clients, which is against SEBI’s fee regulations.
Under Regulation 15A of SEBI (Investment Advisers) Regulations, 2013, investment advisers must charge fees under only one mode per client annually.
The fee mode can only be changed after 12 months of onboarding or the last change of mode.
Misleading YouTube advertisements
SEBI found that some YouTube videos published by Basant Maheshwari Wealth Advisers contained exaggerated captions, violating SEBI’s advertising code.
Example video titles flagged by SEBI included:
"100x Portfolio – 3 Saal Mei? Kaise Kiya?"
"10 Saal Mei 10 Guna Aur 20 Saal Me 100 Guna!! Kaise Kare??"
"1 Crore Ko Double Kaise Kare?? Explained in 2 Minutes"
SEBI’s stance on advertising compliance
SEBI stated that the disclaimers in these videos were not clearly visible and were instead uploaded as a PDF link in the description, which does not meet compliance standards.
The regulator also observed that Basant Maheshwari was directing viewers to invest in his Smallcase portfolios through a promotional link in video descriptions.
SEBI ruled that these YouTube videos qualified as advertisements and should comply with SEBI’s advertising norms for investment advisers.
What SEBI’s advertising guidelines say
Advertisements must not be misleading: Investment advisers cannot use exaggerated claims or make unrealistic promises regarding potential returns.
Clear disclaimers required: Disclosures must be prominently displayed and cannot be hidden in external links.
No indirect investment solicitation: Regulated entities cannot influence investors through indirect promotions, such as embedding investment links in social media content.
Why this SEBI order sets a precedent
This ruling sets a precedent for investment advisers using social media for promotions.
SEBI has now clarified that:
YouTube videos by regulated entities qualify as advertisements.
Disclaimers must be clear and easily accessible.
Misleading thumbnails and exaggerated titles are non-compliant with SEBI norms.
