SEBI’s strict action was taken after it found serious lapses while JM Financial acted as a lead manager for a particular public issue, states report.
The SEBI on 7th March banned JM Financial from acting as a lead manager for any new public issue of debt securities. In an interim order the regulator has restricted JM Financial from taking on new mandates as a manager for bond issuances.
SEBI’s strict action was taken after it found serious lapses while JM Financial acted as a lead manager for a particular public issue, reported Mint.
“In respect of the existing mandates, JM can act as a lead manager for the public issue of debt securities for two months,” said Sebi’s whole-time member Ashwani Bhatia in the interim order. The company has been given time of 21 days to file its reply/ objections in the matter, reported Mint.
JM Financial On SEBI Action
JM Financial has responded to SEBI’s action and said that it would fully cooperate with market regulator SEBI in its investigation into the public issue of debt securities. Earlier, Sebi also imposed curbs on the parent company JM Financial from acting as the lead manager for any new debt public issue, reported Business Today.
“The manner in which subscriptions have been managed in this public issue of debt instruments is shocking. The transactions at every stage of this public issue appear to have been done in a predetermined and premeditated manner; and executed clinically to ensure subscription and success… In the process, market integrity and fair price discovery have been compromised,” stated the Sebi order.
Before SEBI, the central bank of the country RBI also put restrictions on JM Financial during this week, after it found discrepancies in loans sanctioned by the company for IPO financing as well as NCD subscriptions.
RBI’s Action Against JM Financial
The RBI barred JM Financial from providing any kind of financing against shares and debentures, including sanction and disbursal of loans against Initial Public Offering (IPO) of shares as well as against subscription to debentures.
RBI also said that it is separately examining any possible regulatory violations and deficiencies on the part of the banks concerned.
“This action is necessitated due to certain serious deficiencies observed in respect of loans sanctioned by the company for IPO financing as well as NCD subscriptions,” stated the RBI on March 05.