SEBI Cancels Licenses of 72 Research Analysts for Failing to Renew Registration

The Securities and Exchange Board of India (SEBI) has cancelled the registrations of 72 research analysts for failing to pay the required renewal fees. The action aims to prevent the misuse of expired certificates by ensuring compliance with market norms. Additionally, SEBI imposed penalties on several entities for engaging in non-genuine trades in the BSE’s illiquid stock options segment.

SEBI Cancels Research Analyst Registrations

SEBI took regulatory action against 72 entities registered as research analysts after they failed to pay their renewal fees, leading to the expiration of their registration certificates. As per SEBI (Research Analyst) Regulations, 2014, every registered research analyst must pay a renewal fee every five years to maintain their registration. The failure of these entities to comply resulted in a summary proceeding under the intermediaries’ rules.

In February 2024, SEBI issued show-cause notices to the defaulters, seeking an explanation for the violation. Following their non-compliance, SEBI’s Chief General Manager Bithin Mahanta exercised his regulatory powers and officially cancelled their registrations. The regulator clarified that this move prevents the potential misuse of expired certificates by misleading investors. SEBI also directed these entities to maintain and preserve records related to investor grievances, client transactions, and fund transfers.

Penalties for Non-Genuine Trades in Illiquid Stock Options

In addition to the registration cancellations, SEBI penalised seven entities for conducting non-genuine trades in the illiquid stock options segment of the BSE. These trades created artificial volumes through large-scale reversal transactions between April 2014 and September 2015.

The entities penalised with fines of Rs. 5 lakh each include Sahadev Paik HUF, Paritosh Saha HUF, Tripta Shroff, and Daksh Share Brokers. Additionally, Abhishek Gupta, Faithful Cloth Merchants Pvt Ltd, and Bajaj Pratisthan Pvt Ltd were also fined for similar violations. SEBI’s investigation revealed that these entities participated in fraudulent trading practices that distorted market integrity, prompting enforcement action.

Conclusion

SEBI’s latest regulatory actions reinforce its commitment to market transparency and compliance. By cancelling expired registrations and penalising non-genuine trades, the regulator aims to uphold investor confidence and curb market malpractices.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.