Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of ₹3 lakh on Growthlift Investment Advisories Pvt Ltd for multiple violations, including failure to comply with know-your-customer (KYC) norms, use of unqualified client-facing staff, excess fee collection, and lapses in anti-money laundering (AML) reporting.
The action follows an inspection conducted by BSE Administration and Supervision Ltd (BASL) covering the period from April 2022 to October 2023.
SEBI found that Growthlift had not obtained registration with the central KYC records registry (CKYCR) during the inspection period, despite regulatory requirements mandating timely registration and uploading of client KYC records.
Although the firm later secured registration, SEBI held that delayed compliance could not cure the earlier violation.
The regulator also took serious note of deficiencies in staffing and qualifications. Growthlift had a large client-facing sales team of 98 employees who were engaged in on-boarding clients.
Under SEBI rules, such personnel are classified as persons associated with investment advice (PAIA) and must meet specific qualification and certification requirements. However, these employees lacked the necessary credentials and the firm had failed to inform the regulator about their roles. Even individuals assisting in research activities were considered part of the advisory ecosystem and therefore subject to the same standards.
Further violations were observed in the firm’s fee practices. SEBI found that Growthlift had charged fees exceeding the prescribed ceiling of ₹1.25 lakh per annum per client in at least 16 instances. Additionally, the firm collected ₹1.9 lakh from three clients without maintaining proper PAN records.
While Growthlift admitted the error and stated that the excess amounts had been refunded, SEBI emphasised that corrective action after the fact does not negate the breach of regulations.
The order also points to lapses in AML compliance. Growthlift failed to intimate the Financial Intelligence Unit (FIU-IND) about the appointment of its principal officer and designated director during the relevant period, as required under anti-money laundering guidelines.
After examining the facts, SEBI held that the firm had violated multiple provisions of the Investment Advisers Regulations 2013 and related master circulars. While noting that there was no quantified investor loss or disproportionate gain and that some corrective measures had been taken, the regulator reiterated that once a statutory violation is established, penalty becomes inevitable.
Accordingly, SEBI imposed a penalty of ₹3 lakh on Growthlift Investment Advisories under Section 15EB of the SEBI Act.
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