Identify mischiefs and tell us, Sebi chief Buch tells PMS players

The regulator's interest is to act as soon as possible on any wrong conduct before it blows into a systemic issue and forces SEBI to come out with hard rules, she made it clear.

Portfolio management services (PMS), which refer to wealth management services for the rich and ultra-rich entities, may well be gaining popularity and size but "mischiefs" need to be identified and reported to the regulator at an early stage, said Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch.

"The industry players know better than others what mischief is going on and so the industry must report the instances, so that the regulator can take early action," said Buch whole speaking at a conference organised by the Association of Portfolio Managers of India (APMI), the industry body of PMS players.

More importantly, she said that if the mischief is not identified at an early stage, the market regulator will have to come hard on the industry with more regulations.

The Sebi chairperson further explained that good players informing about the industry mischief is in their own self-interest.

It is very frustrating for good players to see the bad ones gaining market share by doing mischief, and hence the good ones should report it to the regulator, she said.

Elaborating further to explain the difference between fraud and mischief she said, “mischief is playing in the grey… but fraud is a question of intent. You are knowingly doing something which is not right for the investor because there is some other interest that you are serving.”

Buch also said that the industry needs collaborative efforts instead of individual efforts from the APMI members.

APMI a body representing the PMS industry and has around 450 members and works closely with the market regulator to promote uniformity and best practices in the PMS industry It was incorporated in December 2021.