Académique Documents
Professionnel Documents
Culture Documents
Or that his trading facility has been suspended. The exchanges disabled Prime Securities trading terminal following an alleged default. An investigation into its trading activities is on. Clients can no longer trade through that brokerage. Prime has moved the Securities Appellate Tribunal against the National Stock Exchange confiscating some of its clients funds. Internationally, there have been cases such as MF Global where clients of the brokerage lost money when it went bust. Such issues highlight the problems investors could face if their broker runs into trouble. Sometimes, it becomes difficult for investors and clients to get their money back from the brokerages. Clients whose money is handled by brokers in portfoliomanagement-services accounts can also be stuck for no fault of theirs. Says an NSE member-stockbroker: If portfolio management services are not careful of the type of stocks and securities they buy or don't conduct background checks on companies, you always see such types of problems. As the business is growing rapidly, issues such as the above may crop up occasionally. Portfolio managers handled discretionary assets worth ~5.15 lakh crore, with ~78,198 crore for advisory services. Background check With so much money invested, investors should take extra precaution to take a closer look at how and where they keep their wealth. Individuals can raise certain safeguards for their trading and portfolio accounts. When you sign up for a portfolio service, be wary of any sales pitch that promising high returns. Dont get tempted with any of these gimmicks, as there are no guarantees in the market. Stocks are a risky business and trades can go wrong even for the best of portfolio managers. Before you sign up for a portfolio management service, check a brokers background and whether any disciplinary action has been raised against him or her or even if there have been complaints against them. Also, check whether a broker is registered with Sebi as a portfolio manager. The regulator is supposed to regulate such service providers. Just this one simple check could later save you from trouble. Brokerages offer discretionary and advisory services. In the former, your portfolio manager selects stocks and transacts on your behalf. In the latter, the portfolio manager merely offers advice but carrying out transactions on that advice is left to you. Portfolio managers, however, have to keep separate accounts for each client. Hence, you should know all such transactions made specifically made on your behalf. In a discretionary account, your fund manager takes a call of the stocks that will be selected in your fund. However, you have still to keep tabs on the transactions that take place in your account. PMS providers should give you all details about the trading in your account either online or through a physical statement sent to you every month. Since discretionary services are usually pooled, no separate contract notes might be issued to you. So ensure you file all statements at your end. Says A V Srikanth, chief execu-