JP Morgan Chase Bank N.A. settles proceedings with SEBI over FPI Regulation lapses

JP Morgan Chase Bank N.A. settles proceedings with SEBI over FPI Regulation lapses

• JP Morgan settled SEBI proceedings by paying Rs 34.42 lakh
• Compliance issues with FPI licenses and merger delays.
• SEBI won't enforce unless settlement terms are violated

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Market regulator Securities and Exchange Board of India (SEBI) has settled potential enforcement proceedings against JP Morgan Chase Bank N.A. after the bank paid Rs 34.42 lakh over multiple compliance lapses related to foreign portfolio investor (FPI) regulations.

The settlement follows a suo motu application filed by JPMorgan under SEBI’s settlement framework, wherein the bank agreed to resolve the matter without admitting or denying the findings.

According to SEBI’s order, the case stems from three broad compliance failures of grant of FPI licences to unregulated entities.

Grant of FPI licences to unregulated entities: JPMorgan, acting as a designated depository participant (DDP), granted Category II FPI registrations to four UK-based entities that were not listed as regulated entities with the UK’s financial regulator, the Financial Conduct Authority. This violated FPI regulations.

Also read: SEBI likely to clear netting of funds for FPIs, ease ‘Fit and Proper’ criteria for intermediaries and relax REIT and InvITs norms

Incorrect reclassification under 2019 norms: After the new FPI regulations came into force in 2019, the same entities were reclassified as Category I FPIs without verifying their regulatory status. SEBI noted that this breached eligibility norms and operational guidelines governing FPIs.

Delay in acting on material change in FPI structure: In a separate instance, a merger involving an FPI (Care Super Pty Ltd. merging with Spirit Super) was not acted upon promptly. Despite being informed on November 1, 2024, JPMorgan advised fresh registration only in December and restricted trading after a 38-day delay. During this period, the FPI executed 64 purchase transactions, raising concerns over failure to reassess eligibility and enforce regulatory requirements tied to material changes.

As per SEBI order, bank suo moto proposed a settlement amount of Rs 34.42 lakh, which was reviewed by SEBI’s High-Powered Advisory Committee (HPAC) and later approved by the panel of Whole Time Members. SEBI confirmed receipt of the payment in February 2026.

Under the settlement order, SEBI will not initiate enforcement proceedings for the cited violations. However, it retains the right to reopen the case if the disclosures made by the bank are later found to be incorrect or settlement conditions are breached.

Also read: SEBI drops action against Vishvaraj Environment and 3 merchant bankers as RBI confirms lapses regularised