There were moments of great drama at the conference organised by the Association of Registered Investment Advisers (ARIA), with the Chairperson of the Securities and Exchange Board of India (Sebi), Madhabi Puri Buch even making a deal with the audience of RIAs.
At the conference held on October 4, Buch shook hands on a deal that said that the regulator would ease the norms to hire talent at an advisory if the advisories were willing to be held responsible for the bad actions of their employees. Later, she clarified that the ‘deal’ was made only to the extent that this proposal will be taken to the advisory committee and will be actively considered.
Also watch: Watch Sebi Chairperson Madhabi Puri Buch at Registered Investment Advisers' Conference
In a Q&A session, Harsh Roongta, head of Fee Only Investment Advisors, asked the Sebi Chairperson if the regulator would consider making it easier for the advisories to hire people. He was at pains to convince the Chairperson that there are “good guys” in the industry, who are being burdened with difficult compliance norms.
The current regulations require that the people associated with the advisory are required to have a post-graduate degree or diploma from certain institutions and experience of two years in activities relating to advice in financial products or securities or fund or asset or portfolio management.
Roongta said that the educational qualification and experience requirements stop advisories from hiring freshers and make talent less affordable.
To this, Buch asked if the industry body would go back to the regulator and ask for the qualifications to be reduced further next year, and whether it would ask if advisories must hire even a graduate.
“I was asked why (should advisories) hire a graduate. There was a huge resistance (in this regard)… (with advisories asking) what is wrong with (hiring) a 10th standard pass?”
Roongta assured her that the association wouldn’t go back asking for further leniency in the qualification and eligibility.
To this Buch almost challenged the association with a deal: “Tomorrow, if they (the employees) do anything wrong, they you (the RIAs) can say that he was a rogue employee and that I (the RIAs) are not responsible)… We can do the deal right now (if the impact of the wrongdoing by the person (the employee) will be on the registered entity”.
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When a show of hands by the audience showed that they were willing to take this condition on, Roongta seized the moment and asked Buch to shake hands on the deal and Buch offered her hand.
Later, she said, “Everything we say here, we promise to take to the advisory committee… the deal is that we are open to it (the suggestions made by the RIAs) and we will actively consider it. We will take it to the advisory committee for active consideration”.
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