According to ARIA, between 2013 and March 2025, Sebi issued 218 enforcement orders under the IA (Investment Advisers) framework. Of these, 147 orders (67%) were directed at unregistered trading-call providers, and 65 orders (30%) at registered trading-call providers engaged in activities such as intraday tips, derivatives trading, and stock recommendations.
In comparison, only six orders (8%) were issued against registered investment advisers, and none involved investor losses or misappropriation of funds.
In December 2024, Sebi amended the Investment Advisers Regulations to bar trading-call providers from registering as investment advisers, a move ARIA said would help strengthen the credibility of India’s advisory ecosystem.
“The analysis suggests that most enforcement under the IA Regulations has historically been related to trading-call providers rather than fiduciary investment advisory services,” said Renu Maheshwari, Chairperson of ARIA.
“With trading-call providers now no longer eligible for registration, it may be timely for regulatory focus to evolve towards supporting genuine, client-centric fiduciary advice, while streamlining compliance obligations designed for a different context.”
Key findings from FY25
The report highlights that 50 Sebi enforcement orders were issued in FY25 alone. Of these, 31 (62%) were against unregistered trading-call providers, 15 (30%) against registered trading-call providers, and only 4 (8%) involved registered investment advisers.
Data shows that proprietorship firms accounted for 60% of all penalised entities, indicating that small and unregistered setups dominate the space. Notably, disgorgement and refund orders were directed only at unregistered entities, reinforcing that registration strongly correlates with compliance and investor protection.
Further, 80% of enforcement actions against registered entities originated from Sebi inspections rather than investor complaints, suggesting that most violations were technical or documentation-related rather than harmful to clients.
ARIA called for a recalibrated regulatory framework that distinguishes fiduciary investment advisers, who operate transparently under Sebi norms, from unregistered operators soliciting clients outside the regulatory perimeter.
The association urged Sebi to simplify compliance requirements for low-risk, fiduciary advisory models and focus supervisory resources on fraudulent and unregistered trading-call providers.
Sebi introduced the Investment Advisers Regulations in 2013 to professionalise India’s advisory industry and protect investors from unqualified or misleading operators. However, over the past decade, a flood of trading-call and tip providers has emerged, offering speculative stock or derivatives advice via social media, messaging apps, and subscription models.