Market regulator Securities and Exchange Board of India (SEBI) has issued a regulatory censure against Streetgains Research Services, a research analyst entity run by Kumar Venkataramegowda Santhosh, and barred it from onboarding new clients for one month.
The action follows SEBI’s investigation for the period April 2022 to March 2024 which found multiple violations, including misleading assurances of returns, improper client communication practices and breaches of the Research Analyst (RA) Regulations and the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.
SEBI found that the firm, through its employees, provided explicit and implicit assurances of profits and even of loss recovery while communicating with clients. In multiple instances, sales personnel used phrases such as ‘you will get good returns’, ‘loss will be recovered the same day’, and quantified daily profits which, the regulator held, amounted to inducement and mis-selling. Such conduct was deemed misleading and a violation of the code of conduct which requires research analysts to act honestly and with due diligence.
The regulator examined 11 client interactions and concluded that, in at least six cases, the firm had clearly assured returns or created unrealistic profit expectations. These communications were often accompanied by selective sharing of profitable trades, further reinforcing the impression of guaranteed gains. SEBI held that such actions influenced investor decision-making and qualified as fraudulent and unfair trade practices under PFUTP norms.
In addition to misleading communications, SEBI also found that Streetgains Research Services promoted its past performance on social media. The firm had posted ‘Top 5 Research Calls’ highlighting profitable trades, which SEBI classified as advertisements. Under SEBI’s advertisement code, research analysts are prohibited from showcasing past performance in a manner that could influence investors. The regulator rejected the firm’s argument that such posts were merely informational and ruled that social media communications fall squarely within the definition of advertisement.
Another key issue identified was the firm’s internal sales staff incentive structure. SEBI observed that incentives could potentially encourage the sale of unsuitable products and aggressive client acquisition, although the firm argued that incentives were linked to service quality rather than sales. The regulator remained concerned about the risk of mis-selling arising from such structures.
Further, Streetgains Research Services failed to maintain proper documentation supporting its research recommendations and did not digitally sign records where required. SEBI noted that maintaining rationale and proper records is a core compliance requirement for research analysts, ensuring transparency and accountability in investment advice.
Based on these findings, SEBI concluded that the firm violated multiple provisions of the SEBI Act, PFUTP Regulations, and RA Regulations. The regulator emphasised that promising or implying guaranteed returns is fundamentally against the principles of the securities market and undermines investor protection.
Given the nature of the violations, SEBI issued a regulatory censure and prohibited Streetgains Research Services from accepting new clients for one month.
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