JM Financial's Shares Under Pressure As SEBI Puts Curbs On Leading Public Debt Issues

Shares of JM Financial were dropping on Friday after the Securities and Exchange Board of India (SEBI) placed a halt on the firm taking the lead on public debt issues.

What Happened: JM Financial said it has been directed by SEBI to stop accepting new mandates as a lead manager in public issues of debt securities until March 31, 2025, or until further notice.

SEBI’s order restricts JM Financial’s role in managing public issues of debt securities but does not affect its involvement in equity instruments or other activities. This action follows an interim order issued by SEBI on March 7, allowing JM Financial to continue in its role for 60 days while an investigation proceeded.

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Investigation And Findings: The probe began with SEBI’s routine examination of public issues of non-convertible debentures (NCDs) in 2023. It scrutinised the roles of JM Financial, its brokerage arm JM Financial Services (JMFSL), and its NBFC arm JM Financial Products Limited (JMFPL). The issue in question involved a base size of ₹200 crore with a green shoe option of ₹800 crore, managed by JM Financial.

SEBI found that JMFPL funded investors for the NCD issue and provided them with an exit, incurring a loss. JMFSL facilitated the trades. JMFPL acted as the seller, buyer and re-seller of the NCDs, exploiting its position as the power of attorney holder for many investors. These transactions appeared pre-determined and coordinated to ensure subscription success.

SEBI described the management of subscriptions as “shocking”, indicating market integrity and fair-price discovery were compromised. This order impacts JM Financial’s debt issuance capabilities while its equity activities remain unaffected. The outcome of SEBI’s ongoing probe could lead to further regulatory actions.

Price Action: JM Financial’s share price was down 2.28% at ₹85.32 near the start of trade on Friday.

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