Q.44(1) : Athena Investment Advisers (it’s Partnership Firm) is registered RIA with SEBI (Registration No: INA000010557)

Can we take Sub-broking licenses in the name of any Partner of AIA.  Please also note there will be no fee sharing on our Advisory client part.

I have attached one case study, in which the RIA is also into distribution services.  Can you please confirm the same and advise us.

Below chat is related to the same subject:

As per SEBI recent informal guidance RIA can’t receive commission / brokerage (consideration) of advisory client after the expiry of client`s advisory service also. Is it right meaning interpreted as per SEBI guidance? those having distribution as well as advisory business under same RIA code, what is the general practice they are following ? In a particular case if advisory client doesn’t renew his advisory just after first 6 month, should we provide implementation services without any further earnings for may be life of the client ?

In our case we have provided a list of Advisory clients to the Broker with a request to reduce the brokerage charged to the client to the extent that was being shared with us. They have obliged.

It means you have permanently stopped receiving  commission sharing of advisory clients ? even after expiry of advisory service ….

Should we treat dependent family members at par to Advisory members for same type of arrangement ?

Good update. I remember a discussion earlier where you had concerns on this. It is good to know that the broker could accommodate this, and it is better still that the client is getting reduced brokerage.

After expiry of Advisory service you can ask the Broker to charge and share but in the next FY.

Any client cannot be a Distribution and Advisory client in the same year. This is my understanding.

Sir,  This is with reference to distribution services.  Request you to pls confirm us on same.

Response:

Firstly, in the spirit of law – to not have same client under both distribution and advisory services, you shall not have clients under both services.

Further, since the Group definition in Regulation 22 – Client level segregation of advisory and distribution activities, suggests that the entity which is having controlling interest or is subject to controlling interest, shall be considered as Group and hence, client level segregation needs to be followed.

Secondly, you should disclose to your clients (through mention in the Letter of Engagement and through email or any mode) about such potential conflict of interest arising from sub-broker license in the name of partner of your RIA firm (AIA). This will be in accordance with Regulation 18(5) and Code of Conduct as prescribed in Regulation 15(9).

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