SEBI imposed ₹42 lakh fine on First Global Finance for outsourcing core Portfolio Management Services (PMS) functions and investment decisions to external entities. The regulator also barred the firm from accepting new clients for 21 days effective May 2026. This action follows SEBI's investigation revealing violations of PMS regulations that mandate investment managers to personally handle core investment decisions rather than delegating them to third parties, compromising fiduciary responsibilities.

This enforcement action highlights SEBI's stringent oversight of Portfolio Management Services, where investment managers hold fiduciary responsibility for client portfolios. PMS regulations under SEBI (Portfolio Managers) Regulations, 2020, explicitly require that core investment decisions, research, and portfolio construction remain with the registered portfolio manager. Outsourcing these functions violates the fundamental principle that clients pay for the portfolio manager's expertise and judgment, not that of an unknown third party. The violation undermines investor protection as clients lose transparency about who actually manages their money. The 21-day client onboarding ban serves as both punishment and protection, preventing potential harm to new investors while the firm rectifies its processes. This case reflects SEBI's broader crackdown on operational violations in asset management, similar to recent actions against AIFs and mutual fund distributors. For the PMS industry managing over ₹20 lakh crores, this sets a clear precedent that regulatory compliance cannot be compromised for operational convenience or cost reduction.