In a press release issued on Monday (3 October 2022), the Sebi said that some entities are collecting money from the public with a promise of high returns, through pamphlets and social media platforms. In such schemes, the entities have been mobilizing money in relatively smaller amounts and promising assured returns.

Some of the entities have names similar to that of SEBI registered intermediaries, misleading the public, as though the fund raising is genuine and done by entities registered with SEBI, the regulator said in a statement.

Sebi warned investors not to fall prey to such unauthorised money managers. Further, Sebi registered intermediaries including portfolio managers (who run portfolio management schemes) cannot offer products with assured or fixed return on investment, it added.

Many such unauthorised schemes are run like Ponzi schemes without any real investment made in the securities market, Sebi said.

As per regulations, a portfolio manager shall be a body corporate, registered with SEBI and shall have a contract/agreement with a client to undertake management or administration of a portfolio of securities or funds of the client.

Further, a Portfolio Manager cannot accept funds or securities worth less than Rs 50 lakh from the client and cannot promise any guaranteed or assured return, either directly or indirectly.

Public is advised to do proper due diligence before trusting their money in such unauthorized schemes, Sebi said.

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