Portfolio administration: Sebi flags fundraising by unauthorised entities

The Securities and Exchange Board of India (Sebi) on Monday cautioned buyers in opposition to cash mobilising by unauthorised entities claiming to offer portfolio administration companies (PMS), and requested them to do correct due diligence earlier than trusting their cash in such unauthorised schemes, whereas advising them to take care of solely 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 stated in a press launch.

These entities have been mobilising cash in comparatively smaller quantities and promising assured returns, the discharge stated, including that a few of them have names much like that of Sebi-registered intermediaries, deceptive the general public, as if the fundraising is real and accomplished by entities registered with Sebi.

It clarified that Sebi-registered intermediaries together with portfolio managers (who handle portfolio administration schemes) can’t provide merchandise with assured or fastened return on funding. According to SEBI (Portfolio Managers) Regulations, 2020, a portfolio supervisor is a physique company, registered with the regulator, and shall have a contract/settlement with a shopper to undertake administration or administration of a portfolio of securities or funds of the shopper.

A portfolio supervisor can’t settle for funds or securities value lower than Rs 50 lakh from the shopper and can’t promise any assured or assured return, both instantly or not directly.