March 01, 2012
PR
No. 028/2012
Caution to investors
Investors should not deal with unauthorized Portfolio Management Services
providers
It has come to the notice of SEBI that some entities are soliciting the general
public to entrust their funds and securities to them and offering portfolio
management and advisory services without obtaining certificate of registration
from SEBI to act as a portfolio manager.
Recently, upon coming across one complaint, it was observed by SEBI that one
entity, viz. KE Consulting Group was offering unauthorized portfolio management
services through its website. To protect the interest of investors and to
prevent such unauthorized services from being offered to investors, SEBI has
passed an order against the entity and its proprietor Mr. Manish Thakkar. The
entities have been directed to cease and desist from undertaking the portfolio
management activities, directly or indirectly, in any manner whatsoever.
Further, they have been restrained from accessing the securities market in any
manner. They have also been directed to resolve all pending complaints against
them. Details of the order are available on SEBI website
http://www.sebi.gov.in.
Investors are advised to take the following precautions while availing portfolio
management services:
• Check whether the entity is registered with SEBI as a portfolio manager. Names
of registered portfolio managers and their details are available on SEBI website
http://www.sebi.gov.in
• A Portfolio Management Service is an agreement based service between the
portfolio manager and the client. Before taking up an assignment of portfolio
management, the portfolio manager must enter into an agreement in writing with
the client clearly defining inter se relationship and setting out mutual rights,
liabilities and obligations.
• Ensure that the Portfolio Manager provides a Disclosure Document to the client
giving details about the services offered at least two days prior to entering
into the agreement.
• The Portfolio Manager may offer either discretionary or non- discretionary
services or both. He may even offer only advisory services. Under discretionary
services, the Portfolio Manager has full discretion to manage client
funds/securities as per the agreement. Client may offer any suggestions to
Portfolio Manager; however the final decision with respect to the investment
would lie with the Portfolio Manager. Under non-discretionary services, client
shall have the full discretion in respect of investment/disinvestment of his
money or securities. The Portfolio Manager may provide his advice or suggestions
and may offer execution in respect of investment; however the final decision
with respect to investment shall lie with the client.
• Once client decides to opt for a Portfolio Management Service, client shall
have to bring the minimum investment amount of ` 25 Lakhs. The client may also
provide securities as investment, provided that the total value of investment
including securities is at least ` 25 lakhs. No SEBI registered portfolio
manager can accept any initial investment from client of less than ` 25 lakhs.
• The Portfolio Manager cannot guarantee or assure the returns on client
investment.
Mumbai
March 01, 2012
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