Close on the heels of the Reserve Bank of India (RBI) barring JM Financial Products from IPO financing and even financing against shares, the capital markets regulator the Securities and Exchange Board of India (Sebi) has barred JM Financial from acting as a lead manager for any public issue of debt securities.
According to the Sebi order, JM Financial allegedly engaged in practices that have a “detrimental effect on the orderly functioning of the market and harm the interest of the ordinary investors.”
A 22-page order by Sebi’s whole-time member Ashwani Bhatia stated that JM Financial, along with connected entities, gave an assured exit to certain investors at a profit, thereby incentivising them to apply in the public issue in contravention of the regulatory mandates.
“The manner in which subscriptions have been managed in this public issue of debt instrument is shocking. The transactions at every stage of this public issue appear to have been done in a pre-determined and pre-meditated manner; and executed clinically to ensure subscription and success… In the process, market integrity and fair price discovery have been compromised,” stated the Sebi order.
The probe revealed that in a particular debt issue, a significant number of individual investors sold the securities allotted to them on the day of listing itself.