SEBI Cracks Down on Exaggerated Portfolio Management Service Advertisements

SEBI’s got a message for India’s portfolio managers: keep it real, or pull it down. The market regulator has told Portfolio Management Service (PMS) providers to take down any ads or promotional material that overhype their returns, boast about their track record, or promise more than they can actually deliver.

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Why Now? Because Some Claims Are Too Good to Be True

In a letter dated June 10, 2025, sent to the Association of Portfolio Managers in India (APMI), SEBI flagged a concerning trend: some PMS players are putting out flashy ads on websites, brochures, and even social media that paint an unrealistically rosy picture of their performance. The regulator fears these could mislead clients into thinking these firms are investment wizards who always beat the market.

SEBI put it bluntly: this kind of marketing creates a “false impression” of guaranteed superior returns. So, they’ve asked managers to immediately withdraw these kinds of claims and clean up their advertising across the board.

Follow the Rules, Or Else

This isn’t just friendly advice. SEBI reminded PMS firms they’re bound by the “Code of Advertisement” laid out in the Master Circular for Portfolio Managers, updated last June. That code says your ads have to be clear, factual, and verifiable – no smoke and mirrors.

Even though SEBI’s note is labelled an “advisory” for now, they’ve made it clear: if you keep ignoring the rules, you could face action, fines, warnings, or even suspension.

Why This Matters: The PMS Industry Is Booming

The timing isn’t random. The PMS market is booming. As of March 2025, the industry was managing nearly ₹37.8 trillion in assets, with around 200,000 high-net-worth individuals investing in it. That growth means more competition, more clients, and unfortunately, more exaggerated promises.

SEBI’s worried that as the race for new investors heats up, PMS firms might start stretching the truth in their marketing. That’s where this crackdown comes in.

PaRRVA Is Watching

This move fits neatly into SEBI’s bigger plan for tighter oversight. In December 2024, they launched PaRRVA, the Past Risk and Return Verification Agency. Its job? To fact-check the performance claims of PMS managers, advisers, researchers, algo platforms, and pretty much anyone selling financial advice.

The goal is simple: make sure the numbers being promoted actually add up. With PaRRVA in place, SEBI is making it harder for anyone to fudge the facts.

Investor Protection Is the Bottom Line

This isn’t the first time SEBI has stepped in to protect investors. They’ve done it with mutual funds before, especially when those ads made future returns look like a sure thing. This latest move is an extension of that same principle: protect investors by making sure promotional materials stay honest.

What PMS Firms Need to Do Right Now

If you’re a PMS provider, here’s what’s on your to-do list:

• Audit Your Materials: Check all your public-facing content, websites, social posts, brochures, and investor decks. If anything looks like hype, remove it.
• Review Compliance Protocols: Tighten your internal review process. Make sure all your performance claims can be backed up.
• Prepare for Scrutiny: SEBI may be giving a warning for now, but that doesn’t mean consequences won’t follow.
• Adjust Your Marketing Strategy: Focus on what’s real, verifiable data, risk-adjusted returns, and context. The era of bold, unverified claims might be over.

Industry Takes Note

APMI, the industry body, says it’s on board and working with members to interpret SEBI’s guidelines more clearly. Many firms have already started scrubbing their ads. Legal experts also expect SEBI may roll out clearer rules or updates soon, possibly redefining how PMS firms are allowed to present past performance.

This could just be the start of bigger changes in how financial firms communicate:

• Updated Rules: Expect a revised ad code or more FAQs from SEBI that clarify what's OK and what's not.
• Wider Oversight: As digital marketing, including influencer tie-ups, grows, SEBI might expand its monitoring to those spaces too.
• Random Audits: Firms could be required to get ad campaigns cleared in advance or face surprise compliance checks.

Final Take: Honesty Is the Best Policy

SEBI’s move strikes a clear balance: yes to innovation and growth, but not to hype and half-truths. For PMS firms, the message is straightforward: tell investors the truth, the whole truth, and nothing but the truth.

In tightening ad rules now, SEBI isn’t just protecting investors. It’s also building long-term credibility for India’s growing wealth management industry.