 "JM Financial shares eye another round of panic selling; here's why")
Negative news flow isn't stopping for investors of JM Financial. On Monday, March 11, market participants will react to Sebi's decision to bar the company from taking new mandate to act as a lead manager for any public issue of debt securities.
On Thursday, March 7, the market regulator said that JM Financial, along with its connected group entities, prima facie gave an assured exit to certain investors at a profit thereby incentivising them to apply in the public issue.
The scheme, it noted, involved getting individual investors, who would otherwise not have participated in the issue, to make applications not just by providing funds to them but also by assuring them an exit at a profit on the listing day.
Sebi, thus, has barred JM Financial from accepting new mandates to act as a lead manager for the public issue of debt securities, for flouting regulatory norm.
However, JM Financial can continue to act as a lead manager for the public issue of debt securities for a period of 60 days in case of existing mandates, Sebi said.
According to the regulator's interim order, Sebi undertook a routine examination of the public issues of Non-Convertible Debentures (NCD) during the year 2023.
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The investigation focused on the activities of JM Financial and its related entities in a particular debt issue. The manner, however, in which subscriptions were managed in this public issue of debt instruments was "shocking", Sebi said.
"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," it added.
In an exchange filing, JM Financial Ltd said it would fully cooperate with capital market regulator Sebi in its investigation into the public issue of debt securities case.