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A corporate entity known as a portfolio manager complies with a contract or agreement with the client and provides advice, makes decisions, or takes action on the client’s behalf regarding the management and administration of the customer’s funds and securities. A portfolio manager is simply a professional who makes investment decisions and executes investment activities on behalf of an individual or organisation. The portfolio manager must be able to serve their client’s needs by making investments that will yield the highest return. He has a fiduciary duty and is bound by the terms of the contract that the portfolio manager and his customer have agreed to.
Compliance Regarding portfolio manager Registration with SEBI
The following is a list of the post-registration requirements that the registered portfolio managers must meet.
What guidelines apply to portfolio managers?
The contract between the portfolio manager and the investor governs how a portfolio manager provides services. According to the SEBI Portfolio Managers Regulations, the agreement must include the bare minimum of information. However, the portfolio manager may include extra conditions in the contract with the customer. As a result, an investor is encouraged to carefully study the agreement before signing it.
Enforcement Action for Non-compliance with Registration Requirements
Portfolio managers may face severe action if they do not follow the regulatory requirements. The following are some potential actions the portfolio managers could face for non-compliance:
Liability for action in case of default or non-compliance
A portfolio manager who violates any of the Act’s, its rules, or the regulations made under it will be held liable for one or more of the actions listed there, including the action under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008[1].
Cancellation, Suspension, and Other Actions Related to Registration
The Board may, without prejudice to any action under the securities laws or instructions, directions, or circulars issued, can take any of the following actions against any individual who has been granted a registration certificate under the regulations or act:
(a) fails to comply with any requirements subject to which a registration certificate has been granted to him;
(b) violates any of the provisions of the securities laws or directions, instructions, or circulars issued thereunder.
Appointment of the designated authority
The Board may initiate legal action against any person who has been issued a certificate of registration under the Act and the regulations for non-compliance with the registration requirement.
The Executive Officer shall then designate an officer not below the rank of Division Chief as the designated authority, provided, however, that the Executive Director may, in his discretion, designate a bench of three officers, each of whom shall not be below the rank of Division Chief: Furthermore, such a bench shall be chaired by the senior member, and a majority of that bench shall make any decisions or recommendations.
No officer who has investigated or inspected the claimed violation is eligible to be nominated as a designated authority.
Holding of enquiry
Recommendation of action
The designated authority may, in a report, recommend the following actions after taking into account the information and facts:
The designated authority should submit the report within 120 days after the personal hearing date or the date of receipt of the reply to the notice, whichever comes first.
Order of the Competent Authority
Conclusion
As discussed above, portfolio managers have to face severe actions if they violate the regulatory requirements. In the event of a default of compliance with the regulatory requirement, the regulatory body, the SEBI, has the jurisdiction to take a number of steps.
Portfolio managers must take non-compliance seriously and take proactive measures to correct any errors or violations. The potential effects of non-compliance can be lessened with quick corrective action, collaboration with SEBI, and application of corrective measures. In order to successfully go through the regulatory procedure, it is advised for portfolio managers to consult legal counsel or a professional advisor in the event of non-compliance.
Read our Article:SEBI proposes norms to regulate fractional ownership platforms offering real estate assets
I am a driven and meticulous professional who completed B.Com BL (Hons) from Tamil Nadu Dr. Ambedkar Law University and completed Master of Laws in specialization (Criminal Law with Cyber Crimes). I have extensive experience in Criminal Litigation and want to utilise my legal knowledge in writing also I have proficiency in writing legitimate content with comprehensive research. My core areas of interest are Business Law, Intellectual Property Rights, and Cyber crimes.
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