Sebi bars JM Financial from managing new bond issues after RBI bars company from lending against shares and bonds

SEBI’s strict action was taken after it found serious lapses while JM Financial acted as lead manager on a particular public issue, states said.

The SEBI on March 7 banned JM Financial from acting as lead manager for any new public issue of debt securities. In an interim order, the regulator has banned JM Financial from taking on new mandates as a manager of bond issues.

SEBI’s strict action was taken after it found serious shortcomings while JM Financial was acting as lead manager for a particular public issue, Mint reported.

“In respect of the existing mandates, JM may act as lead manager for public issuance of debt securities for a period of two months,” Sebi’s full-time member Ashwani Bhatia said in the interim order. The company has been given 21 days to file its response/objections in the matter, Mint reported.

JM Financial on SEBI action

Reacting to SEBI’s action, JM Financial said it would fully cooperate with market regulator SEBI in its investigation into public issuance of debt securities. Earlier, Sebi also imposed restrictions on parent company JM Financial to act as lead manager for any new public debt issuance, Business Today reported.

“The way the subscriptions for this public debt issuance have been managed is shocking. The transactions at each stage of this public issue appear to have been executed in a predetermined and premeditated manner; and conducted clinically to ensure enrollment and success… In the process, market integrity and fair pricing have been compromised,” the Sebi order said.

Before SEBI, the country’s central bank RBI also imposed restrictions on JM Financial this week after finding loan discrepancies sanctioned by the company for IPO financing and NCD subscriptions.

RBI’s action against JM Financial

The RBI banned JM Financial from providing any form of financing against shares and bonds, including sanctions and loan disbursements against an initial public offering (IPO) of shares and against subscription of bonds.

RBI also said it is investigating any regulatory violations and lapses by the concerned banks separately.

“This action is necessitated due to certain serious deficiencies observed in respect of loans approved by the company for IPO financing and NCD subscriptions,” the RBI said on March 5.