Investment advisers cannot manage funds, securities on clients’ behalf: Sebi

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Updated: July 02, 2021 9:22 PM

In its reply made public on Friday, the Securities and Exchange Board of India (Sebi) said an IA is required to render investment advise to its clients and not manage funds or securities on behalf of the clients under the IA Regulations.

Investment advisers cannot manage funds, securities on clients' behalf: SebiThe clarifications have been given as part of an informal guidance sought by Waterfield Financial and Investment Advisors regarding investment advisers (IA) rules.

Investment advisers cannot manage funds as well as securities on behalf of their clients and should not contemplate about asking power of attorney in this regard, markets regulator Sebi has said.

Such advisers can only provide investment advise to clients, it added.

The clarifications have been given as part of an informal guidance sought by Waterfield Financial and Investment Advisors regarding investment advisers (IA) rules.

In its interpretative letter, the investment adviser asked Sebi whether its clients can at their volition grant a power of attorney (PoA) to Waterfield authorising it to make enquiries concerning to the clients’ accounts with the custodian.

It, further, sought guidance whether Waterfield can liaise with the clients’ custodian and receive information in relation to clients investment decisions, investment products under the PoA at all times after receiving written consent and instruction from clients.

It asked Sebi to clarify whether such services would be considered “implementation services” under the IA rules.

In its reply made public on Friday, the Securities and Exchange Board of India (Sebi) said an IA is required to render investment advise to its clients and not manage funds or securities on behalf of the clients under the IA Regulations.

Considering the scope of activities allowed to an investment adviser under the IA Regulations, “grant of a PoA has neither been envisaged nor appears desirable for an IA”, Sebi said.

Noting this position is based on the information furnished, Sebi said, “different facts or conditions might lead to a different interpretation”.

“This letter does not express a decision of the board on the question referred,” the regulator added.

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