SEBI was presented a wrong and misleading compliance report under the portfolio managers criteria.
Market regulator SEBI banned two portfolio manager on Monday, Scient Capital and DGS Capital Management. This ban has been imposed on failing to maintain minimum required net worth. According to PTI news, SEBI has stopped them from connecting new clients and accepting additional funds or securities to existing clients. In two separate interim orders, SEBI said that Scient Capital and DGS Capital Management worked as a registered portfolio manager without completing a minimum net worth of Rs 5 crore under the portfolio managers rules.
No progress showed in the direction of compliance
According to the news, despite the end of the time limit to meet the regulator requirement of the net worth (ie, January 15, 2023), the institutions (Scient Capital and DGS Capital Management) in the direction of compliance. No progress is shown. The regulator found that Scient Capital presented a wrong and misleading compliance report under the portfolio managers criteria to SEBI for FY 2023 and FY14, as its net worth was not completing the regulatory limit for both years.
NISM Certification was not achieved
SEBI’s order states that the Chief Officer of Scient Capital had not obtained the National Securities Bazar Institute, or NISM Certification, required for the period from September 2023 to date. According to SEBI criteria, a portfolio manager should have professional qualifications by completing a post -graduate program in finance, law, accounting from a university or a recognized university from a recognized institute by professional qualification or NISM from NISM.
Risk risk for investors funds
SEBI found that the DGS Capital had ignored the compulsory periodic report (NET Worth Certification, Corporate Administration Report and Portfolio Manager Regulation Compliance Compliance Report) with the regulator for both FY23 and FY24. Also, DGS Capital also violated the legal requirement in relation to the NISM certification of the Chief Officer, which was a violation extending from September 7, 2023 to 13 October 2024. The regulator stated that the obligation to maintain the minimum required net value is on a constant basis, as well as stated that the two firms failed to do so and posed a risk for investors’ funds.
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