Funding advisors can’t settle for powers of legal professional from purchasers: Sebi

In a letter to Waterfield Advisors, a Sebi-registered investment advisory firm for high net worth individuals, Sebi issued guidelines denying the ability of investment advisors to accept power of attorney (PoA) from clients. Under the Sebi Rules, Investment Advisers can provide implementation services but not charge fees for them. Waterfield asked if a PoA could be part of such implementation services. The letter was issued on March 30, 2021 and uploaded to the Sebi website on July 2, 2021.

In his letter to Sebi asking for advice, Waterfield had asked if a PoA could be requested to collect information from custodians about account balances, transaction details and other information from customers, or to transmit information to and with custodians Connect. However, Sebi categorically refused the option of taking such a PoA. “An investment advisor is obliged to give his customers investment advice and not to manage any money or securities on behalf of the customer,” says the Sebi guide. “A PoA grant is neither intended for an investment advisor, nor does it appear desirable,” it says afterwards.

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