The Securities and Exchange Board of India (Sebi) on Monday cautioned the public against unauthorised money mobilisation by entities claiming to provide portfolio management services (PMS).
The market regulator said in a statement that it has found that some entities are collecting money from the public claiming to provide PMS. These entities, it added, 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 mobilising 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,’’ it noted.
Cautioning investors to not fall prey to such unauthorised money collection, Sebi said that while investing in securities market, investors are advised to deal only with Sebi registered intermediaries. Many of these unauthorised schemes are run like Ponzi schemes without any real investment made in the securities market.
More importantly, the regulator said that intermediaries who have been registered with it including portfolio managers (who manage PMS) can not offer products with assured or fixed return on investment.
According to the Sebi(Portfolio Managers) Regulations, 2020, a portfolio manager shall be a body corporate, registered with Sebi and shall have a contract or agreement with a client to undertake management or administration of a portfolio of securities or funds of the client.