JM Financial shares experienced an 8 percent decline in early trading on March 11 following the Securities and Exchange Board (SEBI)’s decision to prohibit the company from taking on any new mandate as a lead manager for public issues of debt securities.
As of 9:20 am, the stock was trading at Rs 81.35 on the NSE, marking a 7.5 percent decrease from the previous day’s close.
In an interim order issued on March 7, SEBI stipulated that JM Financial could continue to serve as a lead manager for public issues of debt securities for a period of 60 days from the date of the order.
SEBI’s decision was based on the available material on record, with the investigation into the matter expected to conclude within six months. The order stemmed from an investigation into the involvement of JM Financial’s parent company, its wholly-owned subsidiary JM Financial Services, and subsidiary JM Financial Products in a debt issue.
SEBI found that transactions in the debt issue were conducted in a pre-determined and pre-meditated manner, compromising market integrity and fair-price discovery.
This order comes shortly after the Reserve Bank of India (RBI) prohibited JM Financial Products from extending loans against shares and debentures, including the sanction and disbursal of loans against initial public offerings (IPOs) of shares, effective immediately.
The RBI’s decision, announced on March 5, was prompted by serious deficiencies observed in the financial services firm’s loan process, alongside concerns regarding governance issues and violations of regulatory guidelines.
Since March 5, JM Financial shares have declined by over 8 percent to Rs 87.7 apiece on the NSE.
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