Stop adding clients: Sebi tells errant portfolio managers

Two days after the deadline for non-pooling of assets lapsed, market regulator Sebi has asked portfolio managers not complying with the regulation to stop adding new clients.

Post the lapse of deadline on May 10, client securities which are held in a pool account as on May 11, will have to be frozen with respect to any further transactions. Selling and transfer of securities from the pool acount to respective client accounts will be permitted. Sebi has also prohibited portfolio managers from making fresh purchases on behalf of such clients.

According to an earlier Sebi circular on extension of the deadline, non-compliance after the extended period may attract penal action under provisions of Sebi Act, 1992. In May 2008, Sebi had asked PMS houses not to pool assets of investors the way mutual funds do and had also increased the minimum networth requirement for floating a PMS .