JM Financial stock falls on SEBI ban from debt public issues amidst lapses

On June 21, shares of JM Financial fell by up to 2%, following a directive from the Securities and Exchange Board of India (SEBI). SEBI instructed JM Financial to stop accepting new mandates as a lead manager in public issues of debt securities until March 31, 2025, or until further notice.

The market regulator's order clarifies that the restrictions are limited to JM Financial's role as a lead manager for public issues of debt securities. The company's involvement as a lead manager for public issues of equity instruments and other activities is explicitly excluded from these restrictions.

According to a statement by JM Financial, the order clarifies that the restrictions are limited to the company’s role as a lead manager for public issues of debt securities and do not pertain to other activities, including acting as a lead manager for public issues of equity instruments. Additionally, JM Financial has decided to voluntarily discontinue its entire IPO financing business through its subsidiary, JM Financial Products.

JM Financial has agreed not to contest SEBI’s ongoing investigation and aims to resolve the issue through the regulator’s settlement mechanism. The company has requested that the investigation be concluded promptly.

In an earlier interim order dated March 7, SEBI allowed JM Financial to continue acting as a lead manager for public issues of debt securities for 60 days from the order's date. The regulator stated that the observations in the order are based on the available material and that the investigation into this matter would be completed within six months.

The regulator's interim order followed the Reserve Bank of India's (RBI) directive, which barred one of JM Financial's other group entities, JM Financial Products, from conducting initial public offering (IPO) financing business until the RBI completes special audits.

The banking regulator stated that the action was taken after identifying significant deficiencies in the financial services firm's loan process. Additionally, the central bank raised serious concerns about the company's governance practices and noted violations of regulatory guidelines.

In the previous session, JM Financial shares closed 6% higher at ₹87.48 on the National Stock Exchange (NSE). Over the past year, the stock has gained only 17%, underperforming compared to the benchmark Nifty's returns of approximately 25% during the same period.