SEBI cracks down on misleading portfolio manager ads, flags 'exaggerated claims'
With more money pouring into sophisticated investment avenues and growing interest in PMS offerings from high-net-worth individuals, SEBI’s latest move is seen as a bid to prevent marketing puffery from distorting investor expectations.
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In a move to tighten investor safeguards, the Securities and Exchange Board of India (SEBI) has directed portfolio managers to withdraw all advertisements and marketing materials containing exaggerated or unsubstantiated claims about returns and investment capabilities. The directive, issued on June 10 to the Association of Portfolio Managers in India (APMI), underscores SEBI’s growing concerns over misleading promotions in the wealth management industry.
The market regulator said it had observed “superlative or unverified” claims being made by several registered portfolio managers, both on their websites and in public-facing media. SEBI flagged these communications as potentially deceptive, saying they “create a false impression regarding the apparently superior returns generated by these entities,” according to a report in Business Standard.
SEBI has instructed all such entities to immediately remove non-compliant promotional content and strictly adhere to the Code of Advertisement laid out in its Master Circular for Portfolio Managers, updated most recently on June 7, 2024.
While the regulator's letter serves as a warning, SEBI also made it clear that this advisory does not rule out future enforcement action against violators.
The directive comes as the PMS (Portfolio Management Services) industry continues to expand. As of March 2025, the sector managed assets worth nearly ₹37.8 trillion, catering to around 2 lakh clients.
This clampdown also builds on SEBI’s broader regulatory push for transparency and performance accountability. In December 2024, the watchdog rolled out PaRRVA (Past Risk and Return Verification Agency), a body tasked with independently verifying performance claims made by investment advisers, research analysts, and algorithmic trading platforms.
With more money pouring into sophisticated investment avenues and growing interest in PMS offerings from high-net-worth individuals, SEBI’s latest move is seen as a bid to prevent marketing puffery from distorting investor expectations.
