JM Financial Faces SEBI Restrictions on Acting as Lead Manager

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SEBI extends restrictions on JM Financial, prohibiting the firm from acting as a lead manager for public debt issues until March 31, 2025. JM Financial discontinues IPO financing and resolves to settle with SEBI amid allegations of incentivizing retail investors.

JM Financial News Today

The Securities and Exchange Board of India (SEBI) has extended its restrictions on JM Financial, prohibiting the firm from acting as a lead manager for public debt issues until March 31, 2025. This follows an earlier interim order from March 7, which JM Financial did not contest.

Discontinuation of IPO Financing

JM Financial has committed to completely discontinuing its subsidiary, JM Financial Products' initial public offering (IPO) financing business. Although the Reserve Bank of India (RBI) initially directed a temporary halt pending a special audit, JM Financial Products' Board decided to voluntarily end this business activity permanently.

Focus on Settlement

JM Financial has expressed a strong desire to resolve the matter with SEBI through a settlement mechanism. They clarified in a stock exchange notification that the current restrictions apply solely to their role in managing public debt issues and do not affect other company activities, such as managing public equity issues.

Explore: Jm Financial Limited Share Price

Investigation Background

The case stems from SEBI's investigation into public issues of non-convertible debentures (NCDs) in the previous year. During this probe, SEBI found that JM Financial, as a lead manager, allotted a significant portion of NCDs to retail shareholders. Notably, many retail investors sold their securities on the listing day.

Alleged Misconduct

SEBI's analysis revealed that JM Financial Products, a non-banking financial company (NBFC) within the JM Group, was the counterparty to these trades. JM Financial Products reportedly sold the securities purchased from retail investors at a loss on the same day.

Additionally, SEBI noted that many retail applications were processed through JM Financial Services, the firm's broking arm, and funded by JM Financial Products.

Power of Attorney and Incentivization

SEBI further alleged that JM Financial Products held the power of attorney to operate the accounts of funded investors. This arrangement led SEBI to suspect that JM Financial entities were incentivizing certain investors to apply for securities in issues managed by JM Financial.

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This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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