SEBI conducted an inspection of the company covering the period from 1 April 2024 to 31 August 2025. A show-cause notice (SCN) was issued on 13 August 2026. The company submitted its reply on 27 August 2026, but did not respond to the hearing opportunity offered on 9 September 2026.
The regulator’s most serious finding related to the conduct of the company’s employees and executives towards clients. SEBI found evidence suggesting that clients were assured that losses would be recovered and that profits or returns would be generated, while they were also encouraged to undertake specific trades and arrange additional funds.
In the case of one complainant, referred to as ‘XYZ’, WhatsApp conversations showed employees giving specific trading instructions, including requests to buy multiple lots and to purchase NIFTY options. Clients were also repeatedly asked to share screenshots of their trades. The conversations included messages such as ‘Aur arrange karo fund’, ‘50k add kro’ and ‘fund lao sir tabhii hoga’. At the same time, the client was allegedly given assurances such as ‘Nhi jyega loss’, ‘Profit deke jyega’, ‘Target aa jyega’ and ‘recover ho jyega sir’.
SEBI said such conduct went beyond providing research-related advice. According to the regulator, the communications showed that the entity was influencing clients’ investment decisions and assisting them in executing trades, while simultaneously assuring them that losses would be recovered or profits generated. XYZ had also alleged that the company promised daily returns of around ₹2,000-₹3,000 against an investment of ₹10,000.
Another complainant, PQR, alleged that the company sought ₹2 lakh, purportedly for a stock market investment, and subsequently encouraged large-scale trading. Messages included instructions to buy ‘800 qty’ and an assurance that “1 lakh profit banega isme wait karna sir”. The client was also repeatedly asked to send screenshots. According to the complaint, the ₹2 lakh was subsequently treated as service charges.
SEBI also examined an allegation that the entity shared or demanded a portion of the client’s profits. However, the adjudicating officer (AO) of SEBI, Jai Sebastian, gave the company the benefit of doubt on this issue as there was no clearly legible communication establishing a fixed percentage or specific profit-sharing demand. The findings were confined to the evidence concerning assurances of returns or recovery and inducement to trade.
The regulator held that these activities violated provisions of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, including Regulations 3(a), 3(b), 3(d), 4(1), 4(2)(k), 4(2)(o) and 4(2)(s), read with relevant provisions of the SEBI Act and the Research Analysts Regulations.
SEBI also found deficiencies in the company’s KYC process. Although the entity collected basic information such as clients’ names, PAN, addresses, emails, and mobile numbers, it failed to capture all the details required under the Uniform KYC Format and the CKYCR Template. The company claimed that corrective measures had subsequently been taken, but did not provide supporting evidence. The regulator therefore held the violation established.
Another lapse concerned the fees charged to clients. SEBI had prescribed a maximum annual fee of ₹1.51 lakh per individual or HUF client family, excluding statutory charges. The revised fee ceiling became applicable to existing research analyst clients from 30 June 2025. The inspection found that of 50 clients who had made payments exceeding the prescribed limit, 9 did so after 8 January 2025. The excess fees collected from these nine clients aggregated approximately ₹6 lakh. The regulator also found that plans exceeding the prescribed ceiling continued to be displayed on the company’s website.
The company attributed the excess payments to a transitional period and delayed awareness of the revised fee framework, while also citing additional services. SEBI rejected these explanations and held that the prescribed fee ceiling had to be complied with.
The regulator further found that the company’s website did not contain updated complaint-redressal data within the prescribed timeline. As of 1 April 2026, the information available covered complaints only up to July 2025, instead of being updated by the seventh day of the succeeding month.
Investowryght Research Analytics also failed to submit required reports to the Research Analysts Administration and Supervisory Body (RAASB) within 30 days for the half-year periods ending 31 March 2025 and 30 September 2025.
While determining the penalty, SEBI noted that the precise amount of unfair gain or investor loss attributable to the violations could not be quantified. However, the record showed that investors had been induced to trade and that the complainants had suffered losses.
SEBI concluded that the violations warranted a penalty of ₹10 lakh which the company has been directed to pay within 45 days of receiving the order.
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