New Delhi, Markets regulator Sebi on Thursday confirmed interim directions to ban JM Financial Ltd from acting as lead manager of public issues of debt securities till March 31, 2025, in a case of alleged irregularities in a public issue of debt securities. non-convertible obligations. (ENT).
The regulator, in a confirmatory order, clarified that the restriction only applies to public issues of debt securities and does not affect other activities of JM Financial Ltd (JMFL), including share issues.
In its interim order issued on March 7, Sebi barred JMFL from taking up fresh mandates as lead manager of public issues of debt securities due to possible irregularities in a public issue of non-convertible debentures (NCDs).
JMFL, as lead manager, had allegedly engaged in irregular practices involving retail investors and associated companies within the JM Group.
Sebi, prima facie, found that JM Group entities appeared to incentivize investors to apply for securities in issues managed by JMFL.
He noted that significant allocations of NCD were made to retail investors, who sold these securities on the day of listing. The lead buyer was JM Financial Products Limited (JMFPL), an NBFC of JM Group. JMFPL subsequently sold these securities at a loss.
Additionally, many retail investor applications were funded by JMFPL through JM Financial Services Ltd and JMFPL had power of attorney over these accounts.
Following Sebi's interim order, the JMFL asked the regulator not to confirm the restrictions and instead offered voluntary undertakings. JMFL in hearings on April 24 and June 18, 2024, reiterated these voluntary commitments but did not argue the merits of the case.
As part of the voluntary commitments, JM Financial stated that it will not accept any new mandate as lead manager of public issues of debt securities till March 31, 2025 or a later date specified by Sebi.
The JMFL board of directors voluntarily decided to completely stop IPO financing and decided to improve its systems and processes to avoid irregularities, ensure staff training, conduct workshops on regulatory requirements and submit a certificate of compliance by December 31, 2024.
Considering the same, Sebi said it is necessary to continue with the directions issued through the interim order, which is also part of the voluntary undertaking submitted by JM Financial, till the investigation into the matter is completed.
"JM Financial will not act as lead manager in any public issue of debt securities till March 31, 2025, or such other date as Sebi vide may specify by order," he added.
The regulator, in a confirmatory order, clarified that the restriction only applies to public issues of debt securities and does not affect other activities of JM Financial Ltd (JMFL), including share issues.
In its interim order issued on March 7, Sebi barred JMFL from taking up fresh mandates as lead manager of public issues of debt securities due to possible irregularities in a public issue of non-convertible debentures (NCDs).
JMFL, as lead manager, had allegedly engaged in irregular practices involving retail investors and associated companies within the JM Group.
Sebi, prima facie, found that JM Group entities appeared to incentivize investors to apply for securities in issues managed by JMFL.
He noted that significant allocations of NCD were made to retail investors, who sold these securities on the day of listing. The lead buyer was JM Financial Products Limited (JMFPL), an NBFC of JM Group. JMFPL subsequently sold these securities at a loss.
Additionally, many retail investor applications were funded by JMFPL through JM Financial Services Ltd and JMFPL had power of attorney over these accounts.
Following Sebi's interim order, the JMFL asked the regulator not to confirm the restrictions and instead offered voluntary undertakings. JMFL in hearings on April 24 and June 18, 2024, reiterated these voluntary commitments but did not argue the merits of the case.
As part of the voluntary commitments, JM Financial stated that it will not accept any new mandate as lead manager of public issues of debt securities till March 31, 2025 or a later date specified by Sebi.
The JMFL board of directors voluntarily decided to completely stop IPO financing and decided to improve its systems and processes to avoid irregularities, ensure staff training, conduct workshops on regulatory requirements and submit a certificate of compliance by December 31, 2024.
Considering the same, Sebi said it is necessary to continue with the directions issued through the interim order, which is also part of the voluntary undertaking submitted by JM Financial, till the investigation into the matter is completed.
"JM Financial will not act as lead manager in any public issue of debt securities till March 31, 2025, or such other date as Sebi vide may specify by order," he added.
