SEBI Fines Research Guru Proprietor, Nephew ₹12 Lakh For Violating Investment Adviser Regulations

The Securities and Exchange Board of India (SEBI) has recently imposed a penalty of Rs 12 lakh on Research Guru proprietor Veena Sharma and her nephew Abhishek Sharma after finding multiple violations of the SEBI Act and investment adviser regulations.

Of the total penalty, Rs 7 lakh was imposed on Veena Sharma, the proprietor of the SEBI-registered investment adviser Research Guru, while Rs 5 lakh was imposed on Abhishek Sharma.

The penalties were imposed by SEBI adjudicating officer Sudeep Mishra, who held that Veena Sharma had misrepresented her role, failed to comply with key regulatory requirements, and allowed her registration to be used to legitimise investment advisory activities carried out by unregistered persons.

The case began with a complaint from a former Research Guru employee, who said Veena Sharma did not run the firm and that its operations were controlled by her nephew, Abhishek Sharma. The complaint also alleged that unregistered entities were providing investment advice under the Research Guru name through a franchise-like setup.

SEBI later carried out a surprise inspection covering the period from April 1, 2021 onwards.

The inspection showed that Veena Sharma was seldom present at the office and that day-to-day operations were being run by Abhishek Sharma and several franchise operators. It was also found that the firm's website claimed it had a team of highly qualified analysts, even though none of the employees met the qualification and certification requirements prescribed by SEBI.

Veena Sharma and Abhishek Sharma denied the allegations. They claimed that statements recorded during the inspection were not voluntary and alleged coercion by SEBI officials. They sought to have those statements disregarded.

Rejecting the defence, the adjudicating officer noted that no complaint of coercion was raised for nearly two years after the inspection.

“The Noticees are coming up with this defence as an afterthought,” the officer observed.

On merits, the officer found that Veena Sharma had obtained SEBI registration after declaring that she would personally oversee all operations. The inspection, however, showed that the firm was controlled by Abhishek Sharma and franchise operators, without her participation or control. This material change was never disclosed to SEBI or to prospective clients.

“I note that the entire operations of Research Guru were controlled by Noticee 2 and Noticee 1 seldom attended the office. I also note that Noticee have entered into arrangements with various persons, wherein, the entire activities of Investment Advisory would be carried out by respective persons and the amount collected from clients would be split between Noticee and the respective persons in the ratio of 70:30,” the officer recorded.

SEBI held both liable for misrepresenting their services, ignoring basic compliance requirements, and operating the advisory business through undisclosed franchise arrangements.