A research analyst (RA) claimed that he was not aware of the misinformation that was given in the 'About Us' section of his website for nearly a decade.
Parag Salot's website wrongly stated that he was "India's Youngest SEBI registered investment advisor (IA)", when Salot's certificate of registration was for an RA and not an IA.
When the regulator questioned him about this, he said that the information on the website was content copied from another IA's website, which was done by the website developer. But the regulator said that it was "surprising" that Salot, who has been registered as an RA since 2015, was not aware of this misinformation till March 2024 when SEBI conducted its inspection.
In the order dated January 15, the Securities and Exchange Board of India (SEBI) also noted that the RA's website promised returns of up to Rs 4,000 per "positive trade", when assuring returns is strictly prohibited under the regulations.
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SEBI fined him Rs 17 lakh for these and other violations such as not conducting the annual audit for nearly a decade (from 2015). Regulation 25(3) of the RA Regulations mandates that an RA conducts annual audits from a member of Institute of Chartered Accountants of India or Institute of Company Secretaries of India. Solat submitted that he thought that this requirement was only for corporate RAs and not for individuals. In the order, the regulator said that there was no such exception given to individual RAs and that ignorance of the law was not a defence.
In the order, SEBI's Adjudicating Officer Asha Shetty observed that the default by Salot was repetitive in nature since various violations continued over the years.
The order stated, "As a SEBI registered Research Analyst, Noticee (Salot) was under a statutory obligation to abide by the provisions of RA Regulations and act honestly and fairly in the best interests of their clients, which he has failed to do."
It added, "Such disregard for the provisions of law governing the functioning of Research Analysts calls for a penalty which would act as a deterrent."
But the regulator also noted mitigating factors such as Salot's submission that he had closed his operations as an RA and that there were no active clients.
The regulator had conducted an inspection of Salot's operations on February 27, 2024, and the period under investigation was from April 01, 2022 till February 29, 2024. A showcause notice issued July 5, 2024, was issued to the RA.
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