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SEBI releases circular on Audit of firm-level performance data of Portfolio Managers

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SEBI last week had released a circular titled “Audit of firm-level performance data of Portfolio Managers”. The circular has been issued with the objective to ensure uniformity and transparency in the audit of firm-level performance data by portfolio managers. The highlights of the circular are as follows:

1. Submission of Audit Reports: Portfolio managers now need to submit audit reports on their firm’s performance data to SEBI within 60 days after each financial year.

2. Inclusion of All Client Portfolios: Both discretionary and non-discretionary portfolio management services must be considered when auditing performance data.

3. Standardized Terms of Reference (“ToR”): The Association of Portfolio Managers in India (APMI), in collaboration with SEBI, will establish standardized ToR for the audit process.

4. Exclusion of Advisory Clients’ Performance: The ToR will encompass a stipulation for Portfolio Managers to encompass portfolios from all services during the audit of firm-level performance data. The exclusion of advisory client performance is permissible, provided it is not utilized in promotional materials or on websites.

5. Effective Date of ToR: The ToR as will be specified by APMI will be in effect from October 1, 2023, and all portfolio managers must adhere to them for annual audits.

6. Confirmation of Compliance: Portfolio managers need to submit a compliance report within 60 days of the financial year’s end, certified by directors, partners, or authorized individuals.

SEBI’s proactive approach aims to enhance clarity, trust, and consistency in reporting, bolstering investor confidence and informed decision-making in portfolio management.

A copy of the circular is enclosed below.

Readers are welcome to send their views to Regstreet Law Advisors at info@regsteetlaw.com.

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