Dear Subscribers,
 
On Friday May 6th, SEBI disclosed a settlement order regarding a show cause notice it had served against Amit Jeswani. Among its charges were:
 
“It was observed that being a Research Analyst, the Applicant was selling model portfolio products to his clients / prospective clients. According to SEBI only Registered Investment Advisors (RIA) can sell model portfolios.
 
It was alleged that the firm “had not acted honestly and in good faith and had not ensured maintenance of appropriate standards of conduct and adherence to proper procedure.” The firm had to settle the case for more than Rs28 lakhs.
 
Link to the order
 
While there are views that this order was unfair, we will have to accept as it is. It was entire market’s understanding that Research Analysts are allowed to offer Model Portfolio. Many offerings of Smallcase are model portfolios. But this order changes that perception. The stockletters have been sold as research products (for which we have a Research Analysts’ license) and not as investment advisory products, though we have a license for investment advisory too. But we have to make this clear. As a result of this order:
  1. Lion, Antelope, Panther, Tortoise and Elephant should not be seen as model portfolios.
  2. We have appropriately amended the FAQs and have also taken down the performance charts because we do not want SEBI to interpret that each of these are model portfolios.
  3. It is up to each subscriber to allocate the amount they wish to, for each stock.
  4. All we are offering is a shortlist of investment worthy scrips and buy/sell recommendation.
Wish you prosperous investing
 
Debashis Basu
Founder, MAS
19 May 2022