Markets regulator Sebi on Wednesday came out with an advertisement code for investment advisers and research analysts whereby they have been prohibited from issuing statements which may mislead investors as well as from using superlative terms in their advertisements.
They have also been restrained from using complex language in an advertisement.
According to the watchdog, advertisements by Investment Advisers (IAs) and Research Analysts (RAs) should not contain superlative terms such as "best, No 1, top adviser/research analyst, leading".
However, factual details of any award received by them can be included.
The new code, aimed at further strengthgening the conduct of IAs and RAs, will come into force from May 1, the Securities and Exchange Board of India (Sebi) said in a circular.
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Coming out with an exhaustive code, Sebi said that advertisements should not contain statements, which are false, misleading and based on assumptions, any statement designed to exploit the lack of experience and knowledge of investors,
The advertisements should not also have any promise of assured return to investors, reference of past performances of IA and RA as well as use of Sebi logo.
In addition, the regulator barred them from "extensive use of technical or legal terminology or complex language and the inclusion of excessive details, which may distract the investors" in the advertisement.
Besides, copies of advertisements should be retained by them for a period of five years.
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They will not be involved in games, leagues and competition, which involves distribution of prize money, gifts and medals, Sebi said.
Further, Sebi said that an advertisement issued by an IA or a RA should contain their names, logo, office address, registration numbers.
There should also be the standard warning in legible font stating "investment in securities market are subject to market risk. Read all related documents carefully before investing".
Sebi noted that there should not be any addition or deletion of words from the standard warning.
In case the mode of advertisement is SMS/message/pop-up and the details such as full name, logo, registered office, registration number and standard disclaimer are not mentioned, then official website/ hyperlink should be mentioned in such SMS/message and the website must contain all such details.
Further, the regulator said that prior approval for the advertisement should be obtained from Sebi-recognised supervisory body -- BSE Administration and Supervision Ltd in case of IAs.
In case of suspension by Sebi, the IA and RA concerned should not issue any advertisment either single or jointly during the suspension period.
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