SEBI cautions public against unauthorized money mobilization by entities claiming to provide Portfolio Management Services

 It  has  come  to  the  notice  of  SEBI  that  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.  

It  is  observed  that  in  such  schemes,  the  entities  have  been  mobilizing  money  in  relatively  smaller  amounts  and  promising  assured  returns. Some of  the  entities have names similar to that of SEBI registered intermediaries, misleading the  public, as though the fund raising is genuine and done by entities registered with SEBI. 

SEBI,  therefore,  cautions  investors  not  to  fall  prey  to  such  unauthorised  money  collection. While investing in securities market, investors are advised to deal only with SEBI registered intermediaries.  Further,  SEBI  registered  intermediaries  including  Portfolio  Managers  (who  manage  Portfolio  Management  Schemes)  cannot  offer  products  with  assured  or  fixed  return  on  investment.    Many  such  unauthorised  schemes  are  run  like  Ponzi  schemes  without  any  real  investment  made  in  the securities market.

As per SEBI (Portfolio Managers) Regulations, 2020, a Portfolio Manager shall be a body corporate, registered with SEBI and shall have a contract/agreement with a client to undertake management or administration of a portfolio of securities or funds of the client. Further, a Portfolio Manager cannot accept funds or securities worth less than rupees fifty lakh from the client and cannot promise any guaranteed or assured return, either directly or indirectly. 

Public  is  advised to  do  proper  due  diligence  before  trusting  their  money  in  such  unauthorized schemes. 

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(With input from news agency language)

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