Sebi cautions public against unregistered PMS

The Securities and Exchange board of India (Sebi) on Monday cautioned public against unauthorized money mobilization by entities claiming to provide Portfolio Management Services(PMS). 

This comes after Sebi noticed that some entities are collecting money from the public to provide PMS. This is being done by luring the public, with an assurance of high returns through pamphlets and some social media platforms. 

The regulator observed that in such schemes, the entities have been mobilizing money in a relatively smaller amounts and assuring high returns. Adding that 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. 

It was on 22 July, that the regulator banned certain individuals from accessing the securities markets for three years for falsely promising unrealistic assured investment returns and “fraudulently extracting money” from investors in the name of subscription fee. 

“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”, the regulator said in its circular.

More important, the regulator said 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.

Further, a Portfolio Manager cannot accept funds or securities worth less than ₹50 lakhs from the client and cannot promise any guaranteed or assured return, either directly or indirectly, it said.