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Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
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Will illegal advisors be shut down? 
(Tue, 16 Dec Pre-Open) 
 
It is said that 'the more things change, the more they stay the same'. This is certainly true of the stock market. Whenever a bull market commences, there are many people who come forward to offer 'advice'. Many of them are nothing but fly by night operators. They provide trading tips disguised as advice. You might have received them yourself in the form of e-mail or SMS. If you sign up for these services, do so at your own risk. If the company were to disappear with your hard-earned money, there is limited scope of redress.

The market regulator SEBI has certainly woken up to this menace. It has issued the SEBI Investment Advisors Regulations. The regulation will ensure that any entity which offers investment advice will need to have a proper research structure, back-office and compliance system in place. This is apart from an adequate fund base. With this stock trading has finally come under the regulator's radar. But will these regulations lead to a shutdown of dubious trading services? We are not very confident.

We believe that as long as the lure of quick profits exists, there will always be players willing to satisfy the demand. The difference now is that such shady firms can be taken to task. There will always be so called advisory firms offering 'guaranteed returns'. The simple fact is that there are no guarantees in the markets. 'Buyer Beware' is the key, especially during bull markets.

Stories of mis-selling by insurance firms and mutual funds have been known for a while now. However, we are glad that the regulator has begun the clamp down on the malpractice of dubious advisory services. SEBI's new rules will not bring this to an end soon. But we believe it is an important step forward in protecting the rights of investors as well as maintaining the integrity of the equity markets.

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