SEBI finds Dwaith Advisory charged 10.21% fee instead of 2.5% limit

The core issue examined was whether the performance-based fee structure charged to a client violated the maximum allowable fee caps.

Who it concerns: Dwaith Advisory Private Limited (Noticee), Sunil Thamaran (Client), Harsh Venkatesh (Managing Director/Proxy)

What SEBI found or ordered

• SEBI found that Dwaith Advisory Private Limited charged fees of Rs. 80,35,232/- (10.21% of AUA) instead of the maximum allowable 2.5% (Rs. 28,02,709/-).
• The excess fees charged were calculated at Rs. 52,32,523/-.
• The violation involved charging performance-based fees (25% above a 6% hurdle rate) which SEBI noted is not allowed under the IA Regulations for the applicable category.
• The order cites violations of Clause 2(iii) of SEBI Circular dated September 23, 2020, and Regulation 15A of the IA Regulations.

Also in the document

• The client, Sunil Thamaran, had investments exceeding Rs. 11 crore, which the Noticee argued qualified him as an 'accredited investor' allowing for negotiated fees, but SEBI's findings indicate the charged amount still exceeded the prescribed AUA limit.
• The investigation period covered transactions from December 15, 2023, to February 20, 2024, specifically regarding the scrip of Rail Vikas Nigam Ltd (RVNL).