Compliance with Regulation 16(8) of SEBI (Portfolio Managers) Regulations, 1993
Summary
The circular mandates that portfolio managers must freeze portfolios of non-compliant clients and prohibit fresh purchases for them. It permits the sale of securities and transfer of assets from these frozen accounts while allowing discontinuation of services after three notices. The directive is issued under Section 11(1) of the SEBI Act read with specific Portfolio Managers Regulations to protect investor interests.
Text
portfolio managers may undertake new clients subject to the following: a. Portfolios of non-compliant client accounts shall be frozen; b. Fresh purchases on behalf of such clients shall not be made; c. Selling of securities, however, from such frozen portfolios may be undertaken; d. Transfer of securities from such frozen portfolios to respective client’s account may also be effected.
The portfolio manager may discontinue the services to those clients who are not co-operating for opening separate client accounts, after serving at least three notices, and return the securities/funds to the client. The portfolio manager shall maintain such client-wise records for a period of eight years.
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.
Source: SecMarx — Compliance with Regulation 16(8) of SEBI (Portfolio Managers) Regulations, 1993. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.