Investment service firm Pickright Technologies Pvt Ltd has reportedly violated the advertising code by allowing research analysts and investment advisors to display the accuracy of their trading calls and the performance of their model portfolios.
According to a report by Moneycontrol, a sister publication of Storyboard18, Pickright allowed users to either pick a portfolio based on the returns generated or sign up for trading calls from Sebi-registered experts based on the “accuracy” of the calls.
A legal expert told Moneycontrol that by displaying past performance or “accuracy” of the calls by experts, the Bengaluru-based platform is enabling a violation of the advertisement code for RAs and IAs by the Sebi in April 2023.
As per the lawyers and experts, quoted by Moneycontrol, the RAs and IAs could invite regulatory action for such marketing content.
“RIAs cannot have a product that is meant for use by multiple people because their role is to make customized solutions for individuals based on their investing goals and capacity to take risk,” Naveen Fernandes, the Public Interest Director on BSE Administration and Supervision Ltd (BASL) said.
‘Advertising rules for RAs and IAs’
As per the rules, the RAs or IAs cannot ensure minimum returns, target returns, or percentage accuracy till the achievement of target returns or any other nomenclature that gives the impression to the client that the investment advice/recommendation of the research report is risk-free and/or not susceptible to market risks and/or that it can generate returns with any level of assurance”.
However, Pickright’s page allowed RAs and IAs to display the accuracy levels of their trading calls.
Pickright has refused that it showed the performance of the individual RAs.