During a conference organized by the Association of Registered Investment Advisers (ARIA), Madhabi Puri Buch, the Chairperson of the Securities and Exchange Board of India (SEBI), engaged in a momentous exchange with the audience of RIAs.

At the conference held on October 4, Buch agreed to consider relaxing regulations concerning the hiring of talent by advisory firms, provided these advisories were willing to bear responsibility for the actions of their employees. She later clarified that this proposition would be brought before SEBI’s Advisory Committee for thorough consideration.

During a Q&A session, Harsh Roongta, head of Fee Only Investment Advisors, inquired whether SEBI would consider making it easier for advisories to hire personnel. He emphasized the presence of ethical professionals in the industry who grapple with demanding compliance norms.

Current regulations stipulate that individuals associated with advisory firms must possess a post-graduate degree or diploma from specific institutions and have a minimum of two years of experience in activities related to financial product advice or fund management.

Roongta raised concerns about these educational and experience requirements, stating that they hinder advisories from hiring fresh talent and make recruiting professionals more costly.

In response, Buch asked whether the industry body would approach the regulator next year to further reduce these qualifications, even to the extent of potentially hiring graduates.

Roongta assured her that the association had no intention of requesting further leniency in qualification and eligibility standards.

In a bold move, Buch proposed a deal: “Tomorrow, if the employees do anything wrong, then the advisories can claim that they were rogue employees and disavow responsibility. We can make this deal now if the consequences of employee wrongdoing fall on the registered entity.”

When a show of hands by the audience indicated their willingness to accept this condition, Roongta seized the opportunity and shook hands with Buch to seal the agreement.

Buch clarified, “Everything we discuss here, we commit to taking to the advisory committee. We are receptive to the suggestions made by the RIAs, and we will actively deliberate on them. We will present them to the advisory committee for thorough consideration.”

This exchange at the conference signals a potential shift in SEBI’s approach to hiring norms for advisory firms, aiming to accommodate the interests of both industry professionals and regulators.

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