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SEBI's investigation revealed that Manu Chhabra, a registered investment advisor with SEBI, had charged fees that exceeded the limits set by SEBI regulations. These regulations stipulate that the fees should not exceed Rs. 1,25,000 per annum per client under the fixed mode of payment
The Securities and Exchange Board of India (SEBI) has recently levied a penalty of Rs. 4 lakhs on a Registered Investment Advisor. This action was taken because the advisor charged excessive fees and failed to maintain the PAN (Permanent Account Number) details of their clients, thereby violating the SEBI (Investment Advisers) Regulations, 2013.
SEBI's investigation revealed that Manu Chhabra, a registered investment advisor with SEBI, had charged fees that exceeded the limits set by SEBI regulations. These regulations stipulate that the fees should not exceed Rs. 1,25,000 per annum per client under the fixed mode of payment.
Additionally, the investigation also revealed that Chhabra had failed to maintain the PAN details of his clients, which was in violation of SEBI's circular that required advisors to keep records of their clients' PAN for identification and client-level segregation.
In response to these findings, Chhabra admitted that he had charged Rs. 5,16,524 from one client, which exceeded the fixed limit of Rs. 1,25,000 by Rs. 3,91,524. He contended that this was an unintentional oversight when onboarding the client under the fixed fee mode.
SEBI, in its order, rejected Chhabra's contention that the violation occurred due to the linkage of performance and fixed fees.
The regulatory body emphasized that the provisions of securities laws clearly mandate Investment Advisers to charge fees from clients in either of the two prescribed modes and exceeding the specified limit is a violation of these regulations.
During the inspection conducted by SEBI, it was also discovered that Chhabra had not maintained the PAN details of his clients properly. Out of the 157 clients he had, PAN details were maintained for only 50 of them.
SEBI noted in its order that PAN details are crucial not only for investment advisory purposes but also for Anti-Money Laundering (AML) policy compliance.
As a result of these violations of the SEBI (Investment Advisers) Regulations, 2013 and non-compliance with SEBI's circular, Adjudication Officer H. Hariharan of SEBI imposed a monetary penalty of Rs. 4 lakhs on Chhabra.
Case title: In the matter of Inspection of records of Manu Chhabra (Investment Adviser)
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