JM Financial, Group firms settle case over NCDs

Mumbai: JM Financial and two other entities have settled a case of securities law violation with the Securities and Exchange Board of India (Sebi) by paying ₹1.9 crore as settlement amount.

The other two entities are JM Financial Services (stock broker) and JM Financial Products (non-banking finance company). They have also given an undertaking of voluntary debarment from acting as a distributor in any public issue of debt securities and from initial public offering financing for a period of three months. Additionally, JM Financial, which carries out merchant banking activities, and JM Financial Services have returned ₹2.5 crore to market regulator Sebi.

The case relates to an investigation Sebi had undertaken of the public issues of non-convertible debentures (NCDs) during 2023.

During the examination of one such public issue of NCDs of Piramal Enterprises, it was observed that a significant number of individual investors sold the debt securities allotted to them on the day of listing itself, as a result of which the retail ownership came down sharply.

Sebi also noticed that JM Financial Products used the power of attorney and submitted bid applications for 11,34,000 NCDs, on behalf of 1008 applicants, in the public issue of NCDs of Piramal Enterprises. These applicants were also clients of the stock broker JM Financial Services.

The regulator alleged that JM Financial Products had provided loans to the 1,008 applicants at an interest rate of 10% to apply for the NCDs.