The Securities and Exchange Board of India (Sebi) on Monday warned investors about the mobilization of money by unauthorized companies claiming to offer portfolio management services (PMS) and urged them to perform due diligence before handing over their money entrust to unauthorized systems and advises them to trade only with Sebi-registered intermediaries.
“…some companies are raising money from the public and claiming to offer portfolio management services. These companies have lured the public with promises of high returns through brochures and social media platforms,” Sebi said in a press release.
These entities have mobilized money in relatively smaller amounts and promised safe returns, the press release said, adding that some of them have names similar to Sebi-registered intermediaries, misleading the public as if the Fundraising is genuine and conducted by registered entities using Sebi.
It has been clarified that Sebi registered intermediaries, including portfolio managers (managing portfolio management systems), cannot offer guaranteed or fixed return on investment products. Under the SEBI (Portfolio Managers) Regulations, 2020, a portfolio manager is a legal entity registered with the regulator and must have a contract/agreement with a client to undertake the management or administration of a portfolio of the client’s securities or funds.
A portfolio manager cannot accept any monies or securities valued at less than Rs.50,000 from a client and cannot promise, directly or indirectly, any guaranteed or assured return.
