SEBI bans PMS with more than Rs 200 cr AUM from onboarding new clients, notes "pattern of non-compliance"

If the PMS does not meet these requirements, proceedings for cancellation or suspension of its registration may be initiated.

A portfolio management service (PMS) named DGS Capital Management Pvt Ltd, with more than Rs 200 crore AUM, has not been meeting the minimum networth requirement of Rs 5 crore for two years.

The market regulator has banned the PMS from onboarding new clients and from accepting additional funds or securities from its existing clientsuntil it meets this requirement.

In an interim cum showcause notice issued on February 17, the Securities and Exchange Board of India (SEBI) also asked the DGS Capital to comply with regulatory requirements within 15 days from the order.

If the PMS does not meet these requirements, proceedings for cancellation or suspension of its registration may be initiated.

In the order, SEBI's WTM Amarjeet Singh wrote, "the Noticee (DGS Capital Management) acted as a registered Portfolio Manager without meeting the minimum capital adequacy requirement (net worth of ₹5 Crores) as mandated under the Portfolio Managers Regulations. It is noteworthy that despite lapse of more than two years since the end of timeline for meeting the regulatory requirement of net worth (i.e., January 15, 2023), the Noticee has shown no progress towards compliance."

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He added, "This persistent failure indicates an unacceptable state of affairs. Continuing a pattern of non compliance, the Noticee neglected to file mandatory periodic reports (Networth Certification, Corporate Governance report, and Portfolio Managers Regulations compliance report) with SEBI for both FY 2022-23 and FY 2023-24. Furthermore, the Noticee was in breach of the statutory requirement regarding the Principal Officer's NISM certification, a violation spanning from September 7, 2023, to October 13, 2024."