The Securities and Exchange Board of India (SEBI) has recently imposed a ₹4 lakh penalty on Basant Maheshwari Wealth Advisers LLP for multiple violations of investment adviser regulations. These infractions include improper fee structures and non-compliant advertising practices on YouTube.

Fee Structure Violation

An inspection conducted by SEBI on December 29, 2023, covering the period from October 19, 2023, to December 31, 2023, revealed that the firm charged fees under both Assets Under Advice (AUA)-based and fixed-fee models to 32 clients. This practice contravenes Regulation 15A of the SEBI (Investment Advisers) Regulations, 2013, which stipulates that investment advisers must charge fees using only one mode per client annually. Additionally, any change in the fee mode is permissible only after 12 months from onboarding or the last change. ​

Misleading YouTube Advertisements

SEBI's investigation also uncovered that Basant Maheshwari Wealth Advisers LLP published YouTube videos with exaggerated and misleading captions, violating SEBI's advertising code. Notable examples of these video titles include:​

• "100x Portfolio – 3 Saal Mei? Kaise Kiya?"​

• "10 Saal Mei 10 Guna Aur 20 Saal Me 100 Guna!! Kaise Kare??"​

• "1 Crore Ko Double Kaise Kare?? Explained in 2 Minutes"​mint+11YouTube+11YouTube+11

Furthermore, the disclaimers provided in these videos were not prominently displayed; instead, they were accessible only through a PDF link in the description, which does not meet SEBI's compliance standards. The regulator also noted that Basant Maheshwari directed viewers to invest in his Smallcase portfolios via promotional links embedded in the video descriptions. ​

SEBI’s Advertising Compliance Guidelines

SEBI has outlined clear guidelines for advertising practices among investment advisers:

• No Misleading Advertisements: Investment advisers are prohibited from using exaggerated claims or making unrealistic promises regarding potential returns.​

• Clear Disclaimers Required: Disclosures must be prominently displayed and should not be hidden in external links.​

• No Indirect Investment Solicitation: Regulated entities cannot influence investors through indirect promotions, such as embedding investment links in social media content.​

Implications of SEBI's Order

This ruling sets a significant precedent for investment advisers utilizing social media for promotional activities. SEBI has clarified that:​

• YouTube videos by regulated entities qualify as advertisements and must adhere to SEBI's advertising norms.​

• Disclaimers must be clear and easily accessible within the content.​

• Misleading thumbnails and exaggerated titles are non-compliant with SEBI regulations.​

SEBI has directed Basant Maheshwari Wealth Advisers LLP to pay the imposed penalty within 45 days of receiving the order. Failure to comply may result in recovery proceedings, including the attachment and sale of movable and immovable properties under Section 28A of the SEBI Act. ​

This action underscores SEBI's commitment to enforcing compliance among investment advisers and ensuring that promotional content, especially on widely accessible platforms like YouTube, adheres to established regulatory standards.​

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