JM Financial banned from public debt issue participation by SEBI

In a recent development, JM Financial has been hit with another setback as the Securities and Exchange Board of India has banned the non-bank financial company from participating in new debt issues. This latest blow comes hot on the heels of the Reserve Bank of India's decision to prohibit the company from lending against IPOs.

The move by SEBI comes as a measure to safeguard the interests of ordinary investors. The regulatory body, in an ex-parte order, has prohibited JM Financial from acting as a lead manager or taking on new mandates for public debt issues.

The decision stems from a specific transaction where SEBI noted a significant number of individual investors selling the allotted securities on the day of listing itself. This resulted in a notable shift in the holding pattern, causing retail ownership to plummet sharply.

SEBI highlighted JM Financial's role as a seller, buyer, and re-seller of non-convertible debentures, signalling a potential conflict of interest. Furthermore, the regulatory body disclosed ongoing scrutiny into a related issue in the SME segment of the NSE, where certain entities placed substantial bids under the HNI category before subsequently bidding under the retail category.

In response to SEBI's actions, JM Financial asserted that such transactions were part of its ordinary course of business. However, SEBI emphasized that these practices disrupt the orderly functioning of the market and are detrimental to the interests of ordinary investors.

The ban on JM Financial's participation in public debt issues underscores SEBI's commitment to maintaining market integrity and protecting investor confidence. As the regulatory landscape continues to evolve, financial institutions must adhere to stringent guidelines to ensure transparency and accountability in their operations.

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