The standard warning is a critical element of every Research Analyst (RA) advertisement. It ensures that clients and prospective clients are aware of the risks associated with investing in securities. This article provides a comprehensive technical analysis of the standard warning requirement.
Regulatory Basis
The standard warning requirement is specified in the Advertisement Code circular dated April 5, 2023 (SEBI/HO/MIRSD/MIRSD-PoD-2/P/CIR/2023/51).
The Exact Wording
Standard Warning Text
"Investment in securities market are subject to market risks. Read all the related documents carefully before investing."
Critical Requirements
- No addition or deletion of words shall be made to/from the standard warning
- The text must be verbatim
- The font size must be minimum 10
- The warning must be legible and readable
Why the Standard Warning is Important
1. Investor Protection
The warning alerts investors to the risks associated with investments.
2. Risk Awareness
The warning ensures investors are aware that investments carry risk.
3. Informed Decision-Making
The warning encourages investors to read all related documents.
4. Regulatory Compliance
The warning is a mandatory requirement for all advertisements.
Implementation Requirements
1. Print Media
Requirement: Include the standard warning in every print advertisement.
Guidelines:
- Minimum 10 font size
- Legible and readable
- Clearly visible
- Not hidden in fine print
2. Electronic Media
Requirement: Include the standard warning in every electronic advertisement.
Guidelines:
- Minimum 10 font size
- Legible and readable
- Clearly visible
- Not hidden in fine print
3. Audio-Visual Media
Requirement: For audio-visual media based advertisements:
- The standard warning in visual media based advertisement must be displayed
- The standard warning must be accompanied by a voice over reiteration
- Both the visual and the voice over must be audible in a clear and understandable manner
- The standard warning containing 20 words running for at least 10 seconds may be considered as clear and understandable
4. Non-English Advertisements
Requirement: Whenever the advertisement is being issued in a language other than English:
- The standard warning must be accurately translated in the language of the advertisement
- The translation must be accurate and complete
- The translated warning must convey the same meaning
5. SMS/Message/Pop-up/Social Media
Requirement: When full details cannot be included:
- The standard warning must be included
- A website hyperlink must be provided for full disclosures
Translation Guidelines
English to Hindi Translation
"प्रतिभूति बाजार में निवेश बाजार जोखिमों के अधीन हैं। निवेश से पहले सभी संबंधित दस्तावेजों को ध्यानपूर्वक पढ़ें।"
Translation Requirements
- Accurate translation of the standard warning
- Must convey the same meaning
- Must be in the language of the advertisement
- Must be at least 10 font size
Audio-Visual Implementation
Visual Display
- The standard warning must be displayed on screen
- Minimum 10 font size
- Legible and readable
- Displayed for at least 10 seconds
Voice Over
- The standard warning must be voiced over
- Clear and understandable
- Audible to the viewer
- Accompanies the visual display
Timing
- The standard warning containing 20 words running for at least 10 seconds may be considered as clear and understandable
- Both the visual and voice over must be synchronized
Common Compliance Gaps
1. Modifying the Warning Text
Some RAs add or delete words from the standard warning.
Solution: Use the exact wording without any changes.
2. Using Incorrect Font Size
Some RAs use font size smaller than 10.
Solution: Use at least 10 font size.
3. No Voice Over in Audio-Visual
Some RAs display the warning but do not include a voice over.
Solution: Include a voice over reiteration.
4. Inadequate Duration
Some RAs display the warning for less than 10 seconds.
Solution: Display the warning for at least 10 seconds.
5. Incorrect Translation
Some RAs use inaccurate translations.
Solution: Use accurate translations.
6. Hidden Warning
Some RAs hide the warning in fine print.
Solution: Place the warning prominently.
Compliance Checklist
| Requirement | Compliant? |
|---|---|
| Standard warning is verbatim | ☐ |
| No addition or deletion of words | ☐ |
| Minimum 10 font size | ☐ |
| Legible and readable | ☐ |
| Prominently displayed | ☐ |
| Voice over included (audio-visual) | ☐ |
| Displayed for at least 10 seconds | ☐ |
| Accurate translation (if applicable) | ☐ |
| Website hyperlink provided (if applicable) | ☐ |
Conclusion and How Anuj Desai & Associates Can Help
The standard warning is a non-negotiable requirement for RA advertisements.
Anuj Desai & Associates offers specialized services to help RAs comply with the standard warning requirement:
- Review of advertisements for standard warning inclusion
- Guidance on font size and placement
- Assistance with audio-visual implementation
- Review of translations
- Compliance audit and advisory
Contact us today to ensure your advertisements include the standard warning. Our team will review your advertisements and provide a tailored compliance roadmap.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers are advised to consult qualified professionals for legal and compliance matters. Anuj Desai & Associates is a SEBI compliance consulting firm based in India.