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Portfolio management: Sebi flags fundraising by unauthorised entities

“...some entities are collecting money from the public claiming to provide Portfolio Management Services. These entities have been luring the public, with a promise of high returns, through pamphlets and social media platforms,” Sebi said in a press release.

A portfolio manager cannot accept funds or securities worth less than Rs 50 lakh from the client and cannot promise any guaranteed or assured return, either directly or indirectly. (Reuters/File)

The Securities and Exchange Board of India (Sebi) on Monday cautioned investors against money mobilising by unauthorised entities claiming to provide portfolio management services (PMS), and asked them to do proper due diligence before trusting their money in such unauthorised schemes, while advising them to deal with only Sebi-registered intermediaries.

“…some entities are collecting money from the public claiming to provide Portfolio Management Services. These entities have been luring the public, with a promise of high returns, through pamphlets and social media platforms,” Sebi said in a press release.

These entities have been mobilising money in relatively smaller amounts and promising assured returns, the release said, adding that some of them have names similar to that of Sebi-registered intermediaries, misleading the public, as though the fundraising is genuine and done by entities registered with Sebi.

It clarified that Sebi-registered intermediaries including portfolio managers (who manage portfolio management schemes) cannot offer products with assured or fixed return on investment. According to SEBI (Portfolio Managers) Regulations, 2020, a portfolio manager is a body corporate, registered with the regulator, and shall have a contract/agreement with a client to undertake management or administration of a portfolio of securities or funds of the client.

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A portfolio manager cannot accept funds or securities worth less than Rs 50 lakh from the client and cannot promise any guaranteed or assured return, either directly or indirectly.

First published on: 04-10-2022 at 01:10 IST
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