The Securities and Exchange Board of India (SEBI) has issued a code of conduct to be followed by investment advisers and research analysts as the market regulator looks to crack down on misleading ads.

SEBI has prohibited investment advisers from using superlative terms such as 'Best', 'No. 1', 'Top adviser', 'Leading', and 'One of the best amongst market leaders' among others in any form of advertisement.

The market watchdog has also barred investment advisers from making promises or guaranteeing assured or risk free return to the investors.

"The advertisement shall not imply any assured returns or minimum returns or target return or percentage accuracy or service provision till achievement of target returns or any other nomenclature that gives the impression to the client that the investment advice/recommendation of research report is risk-free and/or not susceptible to market risks and/or that it can generate returns with any level of assurance," SEBI says in its circular.

The regulator has prohibited statements which are false, misleading, biased or deceptive, based on assumptions or projections. It has also prohibited extensive use of technical or legal terminology and the inclusion of excessive details which may distract the investors.

SEBI has also banned investment advisers from referring to any report, analysis, or service as free, unless it actually is free and without condition or obligation.

The code of conduct for advertisements covers pamphlets, circulars, brochures, notices, research reports as well as all electronic, wired, or wireless communication such as e-mail, messaging platforms, social media platforms, radio, telephone, or any other form over the internet.

Advertisements must also include a standard warning in legible fonts, which states, "Investment in securities market are subject to market risks. Read all the related documents carefully before investing".

In audio-visual media based advertisements, the standard warning in visual media based advertisement and accompanying voice over reiteration shall be audible in a clear and understandable manner. For example, in standard warning both the visual and the voice over reiteration containing 20 words running for at least 10 seconds may be considered as clear and understandable.

In case the mode of advertisement is SMS, message, pop-up, social media and the details such as full name, brand name, full registered office address, SEBI registration number, membership number of a SEBI recognised supervisory body and standard disclaimer are not mentioned, then official website hyperlink should be provided message and the website must contain all such details, the regulator says.

As part of compliance, SEBI says a prior approval for the advertisement shall be obtained from SEBI-recognised supervisory body. Investment advisers and research analysts shall not engage in games, leagues, schemes, competitions etc. which may involve distribution of prize monies, medals, and gifts among others, says SEBI.

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