SEBI bars JM Financial from managing new bond issuances

SEBI restricts JM Financial from new mandates for bond issuances, allows 60-day extension for debt issues.

Published on: Mar 7, 2024, 17:57:28 IST

By HT News Desk

Prefer HTon Google

Share via

Copy link

In an interim order on Thursday, SEBI (Securities and Exchange Board of India) has restricted JM Financial from taking on new mandates as a manager for bond issuances.

SEBI restricts JM Financial from new mandates. (REUTERS)

However, JM Financial is permitted to continue serving as a lead manager for public debt issues for an additional 60 days, the market regulator said.

ALSO READ- RBI bans JM Financial from lending against shares, debentures

Why SEBI bar JM Financial?

SEBI has barred JM Financial after a routine examination revealed irregularities in the public issues of Non-Convertible Debentures in 2023.

Specifically, in a particular case, a considerable number of individual investors sold their allotted securities on the day of listing, leading to an unusual decrease in retail ownership, the interim order said.

ALSO READ- IIFL Finance share price falls 20% more after RBI ban; Jefferies ‘hold’ call: Will decline continue?

Further investigation found that JM Financial Products Limited (JMFPL) acted as a counterparty to these trades, providing funds for subscription. On the same day, JMFPL-NBFC offloaded a significant portion of the acquired securities to corporate investors at a loss. Additionally, these investors applied for the public issue through the stockbroker JM Financial Services Ltd.

SEBI in its order said that JM Financial, together with connected entities “were found to have given an assured exit to certain investors at a profit thereby incentivising them to apply in the public issue in contravention of regulatory mandates.”

ALSO READ- Paytm's Vijay Shekhar Sharma on RBI action: ‘In my lifetime, I would like…’

RBI has banned JM Financial from lending against shares, debentures

This comes after the Reserve Bank on Tuesday barred JM Financial Products Ltd from providing any form of financing against shares and debentures, including sanction and disbursal of loans against initial public offering, with immediate effect.

The company can, however, continue to service its existing loan accounts through the usual collection and recovery process, the Reserve Bank said in a statement.

ABOUT THE AUTHOR
HT News Desk
Follow the latest breaking news, major developments and agenda-setting stories from India and around the world with the newsdesk at Hindustan Times. Operating round the clock, the desk brings together experienced editors, reporters and correspondents to deliver fast, accurate and contextual reporting across subjects that influence public policy, governance, business, society and international affairs. The HT News Desk covers politics, elections, government policies, the economy, business and markets, science and technology, the environment, law and order, infrastructure, education, climate issues and geopolitics, while closely tracking developments across states, institutions and global capitals. The team also leads coverage of major breaking news events, policy announcements, court proceedings, natural disasters, public emergencies and significant international developments. Reports published by the newsdesk are based on information gathered from reporters on the ground, official statements, government agencies, court records, regulatory filings, recognised institutions and other authoritative sources. Stories undergo editorial scrutiny and verification processes to ensure accuracy, fairness and relevance, and are updated as events evolve and additional information becomes available. Whether covering a key political decision in New Delhi, an economic policy shift affecting millions, a landmark court ruling or a major global event, the HT News Desk aims to provide readers with reliable, fact-based journalism that delivers not only the latest developments but also the context and analysis needed to understand their wider implications.Read More

Stay updated with the latest Business News, stock market updates, petrol and diesel prices, gold and silver rates, income tax updates and major developments from India and across the world.