A Question We Get Asked More Than Almost Any Other
"I'm not really running an advisory business, I just tell a few clients what to buy" is one of the most common things we hear from professionals who haven't yet registered — usually right before they ask, somewhat nervously, what SEBI could actually do about it. The honest answer: more than most people assume, and the exposure grows the longer unregistered activity continues.
Why Registration Isn't Optional Once You Cross the Line
Under the IA Regulations, anyone who, for consideration, advises clients on securities and holds out as an investment adviser must register — regardless of how small-scale, informal, or well-intentioned the activity is. SEBI's enforcement focus is on the substance of what's being done (giving security-specific advice for a fee, even informally) not the label the person giving it uses for themselves.
How SEBI Actually Identifies Unregistered Activity
In practice, unregistered advisory activity typically surfaces through investor complaints (someone who received advice, had a bad outcome, and discovers there's no SEBI-registered entity to complain against), social media and marketing monitoring, or referrals from registered intermediaries flagging suspicious unregistered competitors. The "finfluencer" association restriction we've written about elsewhere in this series exists specifically because SEBI has been actively tightening scrutiny of this exact activity.
What Enforcement Actually Looks Like
Where SEBI identifies unregistered advisory activity, the process typically involves an initial inquiry or show-cause notice, an opportunity to respond, and — depending on severity and the person's response — can escalate to formal directions (including cease-and-desist orders), monetary penalties, and in serious or repeat cases, referral for further regulatory or even criminal action given the SEBI Act's own enforcement provisions. This isn't a theoretical framework; SEBI has taken action against unregistered advisory activity with real frequency.
"I Wasn't Charging a Fee" Isn't Always a Complete Answer
Whether "consideration" was actually received is a factual question SEBI can look through — indirect compensation (referral arrangements, commission-linked relationships, in-kind benefits) can still constitute consideration even without a direct, invoiced advisory fee. Assuming informal or indirect compensation arrangements fall outside registration requirements is a genuinely risky assumption to make without specific advice.
The Retroactive Exposure Problem
Perhaps the most underappreciated risk: even after voluntarily registering, prior unregistered activity doesn't automatically disappear from regulatory view. If a complaint or inquiry later surfaces about advice given before registration, that historical unregistered activity remains a live exposure — registering going forward doesn't retroactively cure past non-compliance.
Why "I'll Register Once I'm Bigger" Is the Wrong Sequencing
We regularly encounter professionals who've built a genuinely substantial informal advisory practice — enough clients and fee income that registration is clearly, unambiguously required — who delayed registering because it felt like a "later" problem while the practice was smaller. The exposure doesn't wait for the practice to feel big enough to justify the compliance effort; it exists from the point the activity itself crosses into regulated territory.
Getting Ahead of This Before It Becomes an Enforcement Matter
We help individuals and firms assess honestly whether their current activity requires IA (or part-time IA) registration, and where it does, move quickly to get registered and compliant — including advising on how to handle any pre-registration activity exposure as part of that process.
Uncertain whether your current advisory activity already requires registration? The earlier this gets resolved, the better your position — talk to Anuj Desai & Associates now.
This article is for general informational purposes and does not constitute legal advice on any specific enforcement matter. Please consult us directly if you have received any communication from SEBI or IAASB regarding your activities.