GENERAL MANAGER, INVESTMENT MANAGEMENT DEPARTMENT
IMD/PMS/2/2009/11/05, May 11, 2009
All Registered Portfolio Managers
Sub: Compliance with Regulation 16(8) of SEBI (Portfolio Managers) Regulations, 1993.
In consideration of the requests received from portfolio managers, SEBI, vide Circular No. IMD/CIR No.1/155740/2009 dated: February 27, 2009 had extended the deadline and permitted portfolio managers to comply with the requirements of sub-regulation(8) of regulation 16 of the SEBI (Portfolio Managers) Regulations, 1993 by May 10, 2009. Portfolio managers were also advised to furnish a compliance report to SEBI within a week of expiry of the above deadline. It was also stated in the aforesaid circular that any non compliance after the extended period i.e. after May 10, 2009 may attract penal action under the provisions of the SEBI Act, 1992 and the regulations framed there under.
In continuation of the above, it has been decided that those portfolio managers, who have not complied with the said requirement of sub-regulation (8) of regulation 16 of the SEBI (Portfolio Managers) Regulations, 2008 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.
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 16(8) and Regulation 39 of the SEBI (Portfolio Managers) Regulations, 1993, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Satya Ranjan Prasad