Neil Borate’s Post

“In Financial Services, your product is trust” - poignantly pointed out in Shantanu Deshpande’s podcast with Radhika Gupta from Edelweiss. This is true for banks who sell a promise to be good on depositors money, for brokers who sell a promise on being good on your investments, for insurers for your insurance claims and for mutual funds for your NAV. The corollary is also interesting- do those who garner trust (through ancillary/unrelated means as well) have a legitimate play in Financial Services? For the longest time, this is exactly how decision making has happened for high-value decisions - health, legal, financial needs were based on recommendations by family or close friends - your most trusted coterie. With the expansion of social media, influencers have become the tertiary or sometimes primary layer of information - building light inroads into your high-value decisions. There are health influencers who provide hacks for getting fit or meditation etc and finfluencers have emerged for providing awareness and guidance on fin products. As slight inroads turn into bridges of trust, scope for horizontal and vertical integration emerge. While initially horizontal expansion was educational programs and brand endorsements, the new foray is into bespoke advisory services as highlighted by Neil Borate. At the end of the day, if people trust Sharan Hegde‘s content, they trust his understanding of money and are willing to pay for the trust of him handling their money too. The next few plays could include vertical integration, with set up of mutual funds/PMS etc to enter higher profit pools, as well as build more tech apps on brokerage, wealth management/supermoney (e.g., IndMoney) needs. How successful these will be in the long term will depend on how good finfluencers are on their product - trust - since they will stack layer of trust (“I trust their with financial info”) on top of each other (“I trust their advice, their brokerage app experience and fund decision making”) as they expand. But they’re definitely set to profit in the short term - as they have a guaranteed curious audience (large social media followers) that will pay for trying their product - potentially more first time buyers than any other financial services player because their reputation PRECEDES their conduct. And that’s the most crucial part - legacy financial behemoths (e.g., HDFC Bank) earned trust through several iterations of consistently meeting their promises to EVENTUALLY reach a large customer base. Today, finfluencers have a big head start. The big question is, if you wish to build a play in financial services, where should you enter from now? What trust building techniques are most effective and which are unethical, prone to risks like SEBI’s sudden change in guidelines? These are interesting times - novel answers are set to emerge.

Interesting post by Neil Borate on Finance With Sharan and the 1% Club. While I do not have have access to specific facts about them and do not know the in-and-outs of how they operate, everyone operating in the space should be mindful of the following (amongst other things arising due to the RIA regulatory stipulations including some of the ones Neil has pointed out): The SEBI (Investment Advisers) Regulations, 2013 [Regulation 7(1) and 7(2)] mandate that any persons rendering investment advice on behalf of a non-individual Investment Adviser (IA), are required to, inter alia, have a relevant professional qualification, 2 years of experience in investment advisory, and the specified NISM (or other certifications accredited by NISM) certification for IAs. The experience requirement is higher for the principal officer of a RIA or an individual registered as an IA. Thus, SEBI would likely expect "Personal CFOs" or any other persons associated with a Registered Investment Adviser, if associated with providing investment advice, to comply with the above. I have provided extracts of the relevant regulations for the academically inclined. "7(1)(c) .... Persons associated with investment advice shall meet the following minimum qualifications, at all times - (i) a professional qualification as provided in clause (a) of sub-regulation (1) of regulation 7; and (ii) an experience of at least two years in activities relating to advice in financial products or securities or fund or asset or portfolio management... ... (2) An individual investment adviser or principal officer of a non-individual investment adviser, registered under these regulations and persons associated with investment advice shall have, at all times a certification on financial planning or fund or asset or portfolio management or investment advisory services - (a)from NISM; or (b)from any other organization or institution including Financial Planning Standards Board of India or any recognized stock exchange in India provided such certification is accredited by NISM:" Obviously, this does not constitute legal advice, and one must always consult their own legal advisor.

A very important post pointed out by Neil Borate Just 3 months training to make a person a personal CFO?(the screenshot of the post in the enclosed post says so) Is the profession of providing consultation on handling personal finance of people in various life and financial stages such an easy job like some social media influencers who claim to make masters in a skill by Rs.99 or free? So cheap and easy?? Will this person Sharan of Finance With Sharan handover the responsibility of handling his wealth to someone who claims to have done a 3 months course? It’s high time investors stop falling for such fancy-speaking finfluencers and trust them to manage their financial portfolio. The person coming on the social media platform may or may not be a true expert and may be just a good speaker or skilled in content design and creation. That can no way be a qualification to trust your wealth creation process . Even if the person is an expert himself but doesn’t have the right intent and is only bothered about his/her commercial interest, luring you to become a customer after which your money is handled by some instant-made personal CFOs such as this, that will jeopardise your wealth management process. Beware and take informed decisions in choosing the right expert with the right intent to handle your hard earned money.

The regulation's intent is crystal clear: anyone providing #investmentadvice must be a licensed Registered Investment Advisor (RIA) and adhere to both the letter and the spirit of the law. While financial #influencers and others might interpret these rules in various ways, it is essential that their interpretations align with the law's primary goal: protecting investor interests. Finance, tax and legal professionals excel at identifying loopholes in the laws but sometimes overlook the underlying #intent, often relying on well-crafted #disclaimers to cover their responsibilities. Though there are thousands of financial influencers, only about 500 are actively engaged. With modern AI tools, #SEBI can effectively monitor their #posts, #advertisements, #websites, etc. I trust SEBI is vigilant in overseeing the activities of active financial influencers and will take appropriate actions within the ambit of law.

SEBI has issued brand new guidelines for the resubmission of draft offer documents. The aim? To make things crystal clear for investors and speed up the approval process for public offers. The regulator wants these documents to be presented in a way that's not just informative but also super easy to understand. 💡 The Key Takeaways: 1) 𝐋𝐚𝐧𝐠𝐮𝐚𝐠𝐞 𝐌𝐚𝐭𝐭𝐞𝐫𝐬: SEBI emphasizes using simple language. No jargon or complex terms! Think of short sentences, active voice, and clear tables. 2) 𝐕𝐢𝐬𝐮𝐚𝐥𝐬 𝐒𝐩𝐞𝐚𝐤 𝐕𝐨𝐥𝐮𝐦𝐞𝐬: Visual representation of data is a must. Graphs, charts, and tables are the way to go, ensuring investors can grasp the information with ease. 3) 𝐀𝐯𝐨𝐢𝐝 𝐂𝐨𝐧𝐟𝐮𝐬𝐢𝐨𝐧: No more complex presentations! SEBI urges issuers to steer clear of repeating information or using technical jargon that might baffle the readers. 4) 𝐋𝐞𝐚𝐫𝐧 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞 𝐏𝐚𝐬𝐭: If another regulatory body expresses concerns about the draft offer document, the issuer needs to sort it out before resubmitting. Learn, fix, and move forward! 5) 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐢𝐬 𝐊𝐞𝐲: SEBI stresses that the resubmitted document should comply with all the rules laid out in the ICDR Regulations and other relevant laws. No cutting corners! -------------------------- ♻ Repost. Follow Vedic Legal for more updates. #Legal #legalupdates #sebi #companylaw #business

I shared my opinion at #moneycontrol pertaining to the SEBI Research Analyst and Investment Advisor Regulations against the backdrop of the SEBI's Interim Order in the matter of Zee Business. Thumb rule - What is not prescribed in the law is also proscribed. The prescription can be debated but cannot be a ground of argument to violate the law. https://lnkd.in/dzBGXH4a #Securitieslaw #SEBI #investmentadvisor #researchanalyst

Quick #DigitalMarketsAct #DMA update: the European Commission DG Comp (@EU Competition Policy) has published 4 templates: 1) Request for specification dialogue (Article 8(3), relating to further specification of the obligations in Article 6) 2) Request for suspension (Article 9) 3) Request for exemption (Article 10) 4) Form for compliance report (Article 11) Available here: https://lnkd.in/eZB8ZVyF. The compliance report is particularly important, as it requires gatekeepers to provide a huge amount of information to the Commission to demonstrate their compliance. Unsurprising and in line with the consultation draft, but a reminder that the DMA is ex ante regulation, which to some extent requires a new way of thinking for competition lawyers.

On May 02, 2024, SEBI came up with the Framework for administration and supervision of Research Analysts and Investment Advisers. As per this SEBI Circular, a recognised Stock Exchange may undertake the activities of administration and supervision over specified intermediaries which includes Research Analysts (“RA”) and Investment Advisers (“IA”). Accordingly, #StockExchange shall now be recognised as RAASB and IAASB under Regulation 14 of the ‘RA Regulations’ and ‘IA Regulations’ for administration and supervision of Ras and IAs. As per clause (xi) of Regulation 6 of RA Regulations and clause (n) of Regulation 6 of IA Regulations, an applicant seeking registration as RA and IA is required to be enlisted with RAASB and IAASB respectively. These #RAASB and #IAASB will be self regulatory organisations regulating the RAs and IAs. The core functions relating to registration, enforcement action and disciplinary or penal action shall remain with SEBI and it shall continue to register IAs and RAs as per the mandate given under the Securities and Exchange Board of India Act, 1992. Whereas the roles/functions of proposed RAASB and IAASB detailed out in the circular are more with regard to initial scrutiny of registration applications, post registration applications, monitoring the activities of RAs and IAs, monitoring compliances, grievance redressal administrative actions (including penalty and issuing warning/caution letter), referring to SEBI for enforcement action against RAs/IAs. This circular shall become effective on July 25, 2024 (ninetieth day from the date of publication in the Official Gazette of the amendments to RA Regulations made vide the SEBI (Research Analysts) (Amendment) Regulations, 2024 and the amendments to IA Regulations made vide the SEBI (Investment Advisers) (Amendment) Regulations, 2024). Mindspright Legal #selfregulatoryorganisations #investmentadvisors #researchanalysts #registration #compliance #SEBI #Securitiesmarket #Regulatorycompliances #stockexchanges

Business Asset Disposal Relief (BADR) applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. Where this relief is available sellers can benefit from a 10% tax charge on exit from their business if BADR is available. When the relief is available Capital Gains Tax (CGT) of 10% is payable in place of the standard rate. #SellingBusinessAssets #CGT #BADR

In our latest post, “SEBI’s Market Rumours Amendment: Assessing Information Symmetry and Market Stability”, written by Shaswat Kashyap and Mahika Suri, the authors analyze recent regulations brought by SEBI. The text primarily aims to address market rumours and places emphasis on maintaining market stability within a global framework. This article applauds SEBI’s efforts while examining the delicate balance between information symmetry and market stability. Comparisons with international regulations underscore the global nature of this challenge. Concerns regarding the amendment’s scope, confidentiality, and disclosure guidelines prompt considerations for future adjustments. Amidst these changes, safeguarding sensitive information remains paramount, even as the amendment aligns with global regulatory trends. https://lnkd.in/d_RgvS-u