As more people start trading, many are lured by offers like: “We’ll handle your demat account, you enjoy profits. 40% profit sharing only.”
Sounds convenient? Maybe.
But is it legal? Mostly not.
This blog simplifies what SEBI registered account handling means. What the regulatory body permits for account handling in stock market, how to identify a genuine PMS provider, and what steps to take if you’ve already fallen into a trap.
SEBI Registered Account Handling Services
Let’s begin with the question:
What do you think, can anyone registered with SEBI for any kind of services is allowed to handle your account legally?
Well, that is not true.
Your stockbroker cannot handle your account. The same goes with the registered Research Analyst & Investment Advisors.
So, who can handle it? Is demat account handling legal in India?
In India, only SEBI-registered Portfolio Management Services (PMS) are legally allowed to handle someone else’s trading or demat account.
Here are the specific legal boundaries:
1. Portfolio Management Services (PMS)
- Only a structure is allowed to operate your demat account and take trades on your behalf.
- Must be registered under SEBI (Portfolio Managers) Regulations, 2020
- Can only onboard clients with a minimum investment of ₹50 lakhs
- Operate under strict compliance with reporting, documentation, and performance disclosures.
Who Cannot Handle Your Demat Account?
If someone says:
- “I’m SEBI-registered, share your account details, I’ll trade for you.”
- “Only 25% profit-sharing if we make gains.”
- “Pay ₹5,000/month and we’ll handle everything.”
Ask them: Are they SEBI-registered PMS provider?
If yes, then ask them to share their details before providing your login credentials to them.
Because here’s what’s not allowed even if they’re SEBI-registered as IA (Investment Adviser) or RA (Research Analyst):
| Service Offered | Legal? | SEBI Category Allowed |
|---|---|---|
| Trading on your behalf | No | Taking POA or logging to your account |
| Taking POA or logging in to your account | No | Only PMS |
| Offering profit sharing | No | Not permitted |
| Guaranteed returns or demo handling | No | Not permitted |
| Collecting capital to trade for you | No | Not permitted |
How to Identify a SEBI-Registered PMS
Before handing over anything, here’s how to verify:
- Check their SEBI registration number
- It should say “Portfolio Manager” on SEBI’s official website
- Not “Investment Adviser” or “Research Analyst”
- Confirm Minimum Ticket Size
- PMS can only take accounts with ₹50 lakh or above
- If they offer to handle a ₹2–5 lakh account, it’s a red flag
- Ask for proper onboarding documentation
- SEBI mandates a formal agreement, disclosure of fees, and risk profiling
Trading Account Handling with Profit Sharing
Now, because of little knowledge or because of the greed to earn profit easily and quickly, most people do not consider checking SEBI’s regulation and get trapped in the profit sharing schemes of scammers or registered entity who take benefits of its registration & certification.
In such cases, mostly a trader ends up making losses.
So, what can you do?
Whether the person was SEBI-registered or not, if they offered illegal account handling services and caused a loss or scam, you can take action.
If they are unregistered (Telegram, phone calls, etc.):
- File a cyber crime complaint.
- Report Telegram ID/Group through in-app options
- File a banking dispute if money was transferred via UPI or bank transfer
If they are SEBI-registered RA/IA but offered illegal handling:
- Lodge a complaint in SCORES
- File a complaint with their registration number
- Upload:
- Payment proofs
- Screenshots of chats/emails
- Loss evidence
- Register with us and get assistance in drafting & documentation. We also assist in representing your case further in arbitration to provide recovery of your losses.
Conclusion
To summarize, whenever you look for SEBI-registered account handling services, make sure you check the following points:
- Legal account handling can only be done by a certified MS for ₹50 lakh or above.
- IA/RA cannot touch your account
- Do not share your login access with third parties on Telegram.
- Don’t go by flashy SEBI registration claims or profit-sharing offers.
If you’re trading with limited capital, the best step forward is to learn, not outsource.
