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Wednesday, May 13, 2009

[SEBI]Portfolio manager shall not maintain pool accounts after 10th May 2009&to keep client’s listed securities separately or stop dealing

Portfolio Managers shall keep every client’s listed securities separately on or before 10th May 2009 OR stop undertaking new clients for portfolio management services and submit monthly progress reports till they become fully compliant.

From 10th May 2009 onwards all the POOL ACCOUNTS of clients securities shall be FROZEN and there shall be NO fresh purchases EXCEPT FOR selling or transferring securities from the said account.


As per Regulation 16(8) of SEBI (PORTFOLIO MANAGERS) (AMENDMENT) REGULATIONS, 2008, every portfolio manager shall segregate each clients' listed securities and keep them separately before 10th February 2009, further, the second provisio to this regulation empowers SEBI to relax the said provision.  SEBI vide Circular No. IMD/CIR No.1/155740/2009 dated February 27, 2009 has extended the said time limit to 10th May 2009 and also mandated to furnish a compliance report to SEBI within a week of expiry of the above deadline.

Further, it stated that any non compliance after the extended period may attract penal action under the provisions of the SEBI Act, 1992 and the regulations framed there under.

In continuation of the above, SEBI vide circular no. IMD/PMS/2/2009/11/05 dated May 11, 2009 has been decided that those portfolio managers, who have not complied with the said requirement of Regulation 16(8) by the said deadline of May 10, 2009, shall immediately STOP undertaking new clients for portfolio management services till the time they become fully compliant with the said requirements.  Such portfolio managers shall submit a monthly progress report in regard to status of compliance.

Post the deadline of May 10, 2009, portfolio managers are also advised to comply with the following:
1. Client securities which are held in a pool account as on May 11, 2009 shall be frozen with respect to any further transactions.
2. Selling of securities, however, from such pool account shall be permitted
3. Transfer of securities from such pool account to respective client’s account shall also be permitted.
4. No fresh purchases on behalf of such clients should be made.
The above is without prejudice to SEBI’ s rights to take such actions against them for the said non-compliance as may be deemed appropriate in the matter.

Source: SEBI vide circular no. IMD/PMS/2/2009/11/05 dated May 11, 2009


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