SEBI Cancels Investment Adviser Registration After Finding Grave Violations in Certification and Reporting Compliance

SEBI Cancels Investment Adviser Registration After Finding Grave Violations in Certification and Reporting Compliance​

New Delhi: The Securities and Exchange Board of India (SEBI) has issued a severe regulatory order, canceling the registration of Ms. Prerna Sharma as an Investment Adviser (IA). The decision stems from multiple findings related to the failure to maintain mandatory NISM certifications and the non-submission of required periodic reports.

The comprehensive SEBI order, dated June 12, 2026, subjects the IA’s registration (Registration No: INA000007304) to immediate cancellation under Section 12(3) of the SEBI Act, 1992, read with Regulation 30A of the SEBI (Intermediaries) Regulations, 2008.

Key Violations Regarding NISM Certifications​

The investigation revealed serious lapses concerning professional qualifications and continuous compliance requirements. The order confirms that Ms. Prerna Sharma’s required certifications under NISM expired several years ago. Specifically, her NISM Series-X-A: Investment Adviser (Level 1) Certification expired on September 14, 2021, and her NISM Series-X-B: Investment Adviser (Level 2) Certification expired on December 14, 2021.

SEBI emphasized that the requisite NISM certification is a benchmark for validating both competency and professional ethics in investment advisers. The agency found that failure to obtain fresh certifications before the expiry of existing ones directly violates Regulation 7(2) of the IA Regulations. This constitutes an admitted violation, leading SEBI to deem these lapses as grave and serious violations.

Failure in Periodic Regulatory Reporting Obligations​

In addition to the lapse in certification status, the investigation highlighted critical failures regarding regulatory disclosures. The noticee failed to submit two consecutive periodic reports to the Investment Adviser Administration and Supervisory Body (IAASB), which is BSE Limited. These missed deadlines pertained to the half-year periods ending on March 31, 2024, and September 30, 2024.

SEBI regulations mandate that all registered IAs submit periodic reports containing vital information such as SEBI Registration Number, IAASB Membership Number, bank account details for advisory fees, and NISM certification status. The failure to provide these periodic updates undermines the regulatory framework designed for transparency and investor protection, as stipulated under Regulation 15(12) and 28(d) of the IA Regulations.

SEBI Orders Immediate Cancellation of Registration​

Given the established violations—both concerning mandatory qualification maintenance and report submissions—SEBI has moved to cancel the investment adviser registration immediately. The Competent Authority declared that Ms. Prerna Sharma’s certificate of registration, INA000007304, is cancelled with immediate effect.

The order stipulates that despite the cancellation, the Noticee remains liable for all obligations as an Investment Adviser. This includes any outstanding fees and dues owed to SEBI. Furthermore, Ms. Sharma must ensure the preservation of required records, redressal of investor grievances, transfer of client records or funds, and continuity of service to clients.

SEBI concluded that the submissions made by the noticee—requesting voluntary surrender due to lack of activity since 2021—demonstrated a malafide intention. The regulator stressed that adherence to prescribed legal acts must be done in letter and spirit, irrespective of the counsel’s stated intentions or regret regarding procedural lapses.