SEBI has barred JM Financial from managing debt public issues till March 2025. Here's why

The Securities and Exchange Board of India (SEBI) has barred JM Financial from serving as the lead manager for any public debt security issues until March 31, 2025, over allegations of fraudulent practices.

This decision follows JM Financial's voluntary agreement to comply with most of SEBI's interim directives. The company has also pledged not to challenge SEBI's ongoing investigation, seeking resolution through the regulator’s settlement mechanism.

SEBI, in a confirmatory order, clarified that the restriction only applies to public issues of debt securities and does not affect JM Financial Ltd (JMFL) other activities, including equity issues.

In a statement, JM Financial clarified that the restriction pertains solely to its role as a lead manager for public debt security issues and does not affect its other activities, including managing public equity issues.

"The order, consistent with our voluntary undertaking, prohibits us from accepting new mandates as lead manager for public debt security issues until March 31, 2025, or a later date specified by SEBI. This limitation is strictly related to our role in public debt security issues and does not impact our activities in managing public equity issues. We are committed to cooperating with SEBI for a swift resolution," JM Financial stated in an exchange filing.

Additionally, JM Financial has decided to voluntarily discontinue its IPO financing business through its subsidiary, JM Financial Products, as confirmed by SEBI on Thursday.

In March, SEBI accused JM Financial of incentivizing certain investors to apply for public issues and executing transactions in a predetermined manner to ensure subscription and success.

It noted that significant NCD allocations were made to retail investors, who sold these securities on the listing day. The primary buyer was JM Financial Products Limited (JMFPL), a JM Group NBFC. JMFPL then sold these securities at a loss. Further, many retail investor applications were funded by JMFPL through JM Financial Services Ltd with JMFPL holding power of attorney over these accounts.