Sebi Asks Portfolio Managers Not to Go Easy on PMS Rule

The Securities and Exchange Board of India, or Sebi, has directed portfolio managers to abide by the minimum investment amount requirement of.5 lakh for portfolio management schemes. The regulator had observed that portfolio managers were accepting funds or securities of less than.5 lakh from clients and opening accounts on the basis of the client's commitment that.5 lakh would be brought in soon. Besides, there has also been instances of committed amounts being higher than the prescribed minimum of.5 lakh while the initial amount collected from the client could be below.5 lakh, Sebi said. In a bid to bring about greater uniformity, Sebi has clarified that the first single lump-sum investment amount received as funds or securities from clients should not be less than.5 lakh. It is seen that many portfolio managers are not making adequate disclosures regarding portfolio performance in the disclosure document, the regulator said. Portfolio managers will also have to disclose the performance of portfolios grouped by investment category for the past three years. They have to ensure that the disclosure document is given to all clients along with the account opening form at least two days in advance of signing of the agreement.

Economic Times, New Delhi, 03-11-2010