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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Regulatory, Governance and Ethical Aspects of Portfolio Managers

Which of the following is a prohibited practice for a portfolio manager under the SEBI (Portfolio Managers) Regulations, 2020?

Investing client funds in securities of the portfolio manager's associates without meeting disclosure and regulatory limits is prohibited because it creates conflict of interest. Separate client accounts, periodic reports and a written agreement are required duties, not violations.

  1. AMaintaining separate client-wise accounts for funds and securities
  2. BInvesting a client's funds in securities of the portfolio manager's associates without any disclosure or client-specific consent norms being metCorrect
  3. CProviding periodic reports to the client
  4. DObtaining a written agreement with the client before starting services

Explanation

Portfolio managers must avoid conflicts of interest and may invest in associate securities only within the regulatory limits and with proper disclosures. Keeping separate accounts, giving reports and signing an agreement are all mandatory good practices, not violations.

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