Sebi’s order comes after Sebi undertook a routine examination of the public issues of Non-Convertible Debentures during the year 2023
The Securities and Exchange Board of India (Sebi) on Thursday barred JM Financial Ltd from taking new mandate for acting as a lead manager for any public issue of debt securities, for indulging in unfair trade practices. However, in case of existing mandates, JM Financial can continue to act as a lead manager for public issue of debt securities for a period of 60 days, Sebi said in its interim order.
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This came days after the Reserve Bank 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. Sebi’s order came after the regulator undertook a routine examination of the public issues of Non-Convertible Debentures (NCD) during the year 2023.
“The regulator noted that noticee (JM Financial) along with its connected group entities were prima facie noted to have given an assured exit to certain investors at a profit thereby incentivising them to apply in the public issue in contravention of the regulatory mandates,” it added. It further said the action of JM Financial appears to be an unfair trade practice.
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On March 5, the RBI had imposed restrictions on JM Financial Products Ltd after finding that the company indulged in various manipulations, including repeatedly helping a group of its customers to bid for various IPOs by using loaned funds. The restrictions were with immediate effect.
It barred the systemically important non-deposit-taking NBFC from providing any kind of financing against shares and debentures, including sanction and disbursal of loans against IPO of shares as well as against subscription to debentures.
Besides directing the entity from “cease and desist” from financing activities, the RBI said it is separately examining any possible regulatory violations and deficiencies on the part of the banks concerned.
