The market regulator, in a confirmatory order on Thursday, barred JM Financial from acting as a lead manager in any public issue of debt securities till March 31, 2025 or any further date which SEBI may specify. This will not impact its role as a manager of equity instruments, however.
The confirmatory order follows an interim order issued on March 7, which was not contested by the company.
In an undertaking filed with SEBI, the company said its subsidiary JM Financial Products (JMFPL), an NBFC, will voluntarily discontinue its IPO financing business. The RBI had earlier directed JMFPL to discontinue the IPO financing business till its special audit was over and resultant issues were resolved.
The company undertook to fix its existing systems and processes related to debt securities to prevent any kind of wrongdoing alluded to in the interim order going forward.
JM Financial was one of the lead managers to a public issue of NCDs. Many of the retail shareholders, who were allotted securities pursuant to the issue, exited on the listing day itself. The counter party to the trades of these retail investors was JMFPL.
JMFPL subsequently sold down the securities, purchased from the retail investors, at a loss. Applications of several retail investors were routed through JM Financial Services, the stock broker which is part of JM Group, and their applications were funded by JMFPL.
In a statement, the company said it is committed to cooperating with SEBI for an expeditious resolution of the matter.