Can SEBI’s new code affect broker calls, media appearances?

In other words, legal experts say it may cover views on individual stocks or price targets issued by RAs.

Since brokers are required to have an RA license to make such calls on television or other media, brokers’ daily media activity may be affected by the code. The code does not explicitly ban such advertisements but sets a series of restrictions on them.

“SEBI-registered stock brokers who issue research reports or research analysis are required to obtain registration as research analysts. Accordingly, when a broker issues a buy/sell recommendation on a stock on a TV channel, and If it is in the form of a research report or analysis that is intended to influence an investor’s investment decision, an RA license will be required, given that such communication will be targeted to the public at large and will be intended for investors and potential investors. Will be able to influence the decisions of investors, it will be an advertisement within the purview of the SEBI Advertisement Code for Investment Advisers and Research Analysts.” Namita Vishwanath said, Partner, Induslaw.

“Under the SEBI Code, such statements are not prohibited in themselves, however, there are prohibitions with respect to what the advertisement may contain. Such statements should not be misleading or based on speculations. They should be based on the experience/ experience of the investors. Don’t take advantage of lack of knowledge.

Harish Kumar, Partner, Luthra & Luthra Law Office India, said that as per BASL guidelines, recommendation/promotion of any specific investment/scrip is not permitted in any manner. “Thus, prima facie, such stock recommendations are not permitted, however, a clear communication from SEBI in this regard (with bifurcation on recommendations made to public and clients) would bring clarity,” said BASL. SEBI is the authorized body to regulate RIAs. It does not regulate RA but its interpretation of the Advertising Code can be considered to apply to RA as well.

Anil Chowdhary, partner, Finsec Law Advisors, however, differed with the strict interpretation of the advertising code. “Brokers have their own advertising guidelines and all client communications including research recommendations with reference to FAQs issued by the exchanges are exempt from advertising restrictions. Further, the issuance of buy/sell recommendations is specifically prohibited under the Rules. is permitted and no prior approval can be imposed for issue of recommendations. However, promotional material that entices potential customers by showcasing past performance etc. will be covered under the Advertising Code,” he said.