Description
SEBI final order against Scient Capital Private Limited for violations including failure to maintain minimum net worth requirements and NISM certification non-compliance.
Summary
SEBI issued a final order under Sections 11(1), 11(4), 11(4A), 11B(1), and 11B(2) of the SEBI Act, 1992 against Scient Capital Private Limited (SEBI Registration No. INP000005166), a registered Portfolio Manager. The order stems from an examination conducted for the period January 1, 2023 to December 31, 2024, which revealed multiple regulatory violations including failure to maintain minimum net worth requirements, submission of incorrect compliance reports, and non-compliance with NISM certification requirements.
Key Points
- Scient Capital Private Limited failed to maintain the minimum net worth requirement of INR 5 crores as mandated under PM Regulations
- The entity submitted incorrect compliance reports contrary to SEBI Master Circular for Portfolio Managers dated June 7, 2024
- Non-compliance with NISM certification requirements for Principal Officer under PM Regulations and SEBI Certification Regulations 2007
- Interim order dated February 17, 2025 prohibited the entity from on-boarding new clients and accepting additional funds from existing clients
- Entity was directed to comply with minimum net worth requirements within 15 days of the interim order
Regulatory Changes
No new regulatory changes introduced. This order enforces existing requirements under:
- SEBI (Portfolio Managers) Regulations, 2020
- SEBI Master Circular for Portfolio Managers dated June 7, 2024
- SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007
- Notification dated September 7, 2021 regarding NISM certification
Compliance Requirements
- Portfolio Managers registered prior to commencement of PM Regulations 2020 were required to raise net worth to at least INR 5 crores within 36 months from commencement
- All Portfolio Managers must submit accurate compliance reports as per PM Master Circular requirements
- Principal Officers must hold valid NISM certification as required under applicable regulations
- Portfolio Managers failing to meet net worth requirements are prohibited from on-boarding new clients or accepting additional funds from existing clients
Important Dates
- January 1, 2023 to December 31, 2024: Examination Period
- August 21, 2024: SEBI requested details on net worth and Principal Officer information
- February 17, 2025: Interim Order cum Show Cause Notice issued
- 15 days from February 17, 2025: Deadline for Noticee to comply with minimum net worth requirement
Impact Assessment
This enforcement action has limited market-wide impact as it targets a specific portfolio manager. However, it serves as a reminder to all registered Portfolio Managers regarding strict compliance with:
- Minimum net worth requirements
- Accurate compliance reporting obligations
- NISM certification requirements for key personnel
Failure to comply may result in restrictions on business operations, suspension, or cancellation of registration. The order demonstrates SEBI’s active monitoring of intermediaries and enforcement of regulatory standards to protect investor interests.
Impact Justification
Enforcement action against a specific portfolio manager for regulatory violations. Limited market-wide impact but highlights compliance requirements for intermediaries.