Sebi Bars JM Financial from Debt Securities Lead Management Until 2025

Sebi has confirmed its interim decision to bar JM Financial Ltd from managing public issues of debt securities until March 31, 2025, due to alleged irregularities. The restriction does not affect other activities of JM Financial. The investigation is ongoing, with JMFL agreeing to voluntary undertakings.

India's market regulator, Sebi, on Thursday upheld its interim ruling that prevents JM Financial Ltd from acting as a lead manager for public issues of debt securities until March 31, 2025. This prohibition follows allegations of irregularities in a public issue of non-convertible debentures (NCDs).

In a confirmatory order, Sebi clarified that while JM Financial Ltd is barred from managing public debt security issues, its other activities, including equity issues, remain unaffected. Initial restrictions were placed on JMFL on March 7 due to potential malpractices involving retail investors and associated companies within the JM Group.

The regulator's investigation revealed significant NCD allocations to retail investors, which were later bought by JM Financial Products Limited (JMFPL), a JM Group NBFC, often at a loss. Moreover, many retail investor applications were funded by JMFPL through JM Financial Services Ltd, with JMFPL holding power of attorney over these accounts.

Following the interim order, JMFL sought relief by offering voluntary undertakings rather than contesting the allegations. Impressively, its board decided to cease IPO financing entirely and initiated improvements in processes to prevent future misconduct. Other measures include staff training, conducting workshops on regulatory requirements, and submitting a compliance certificate by December 31, 2024.

Despite these efforts, Sebi concluded that extending the initial restrictions until the investigation is complete is necessary. As such, JM Financial Ltd remains barred from lead managing any public issue of debt securities until March 31, 2025, or any later date specified by Sebi.

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