JP Morgan Chase Bank (JPMC) settled with the market regulator for Rs 22.1 lakh, after the Securities and Exchange Board of India (Sebi) found the designated depository participant in violation of SEBI (FPI) Regulations 2019.
The sections under which the violations were recorded include ensuring only registered foreign portfolio investors (FPI) are allowed to participate in securities market and reassessing the eligibility of an FPI investor following a change in its structure or constitution or change in common ownership or control.
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In August 2021, designated depository participant JPMC informed Sebi about the delay in n intimation of change in material information of Fidelity Investments Money Management (FIMM). FIMM had been registered as an FPI and the material information involved its merger with its affiliate Fidelity Management & Research Company (FMRC).
Following this, Sebi investigated this delay.
The examination revealed that the merger of FIMM with FMRC led to the cessation of FIMM, the entity which was registered as FPI. However, after the merger, the surviving entity — FMRC — which had not obtained FPI registration, operated in the Indian securities market under the name, accounts and FPI registration of FIMM.
The examination also revealed that JPMC failed to prevent FMRC from trading in the securities market even though it had material on record that indicated that FIMM had merged into FMRC and FMRC did not have a valid FPI registration.
Therefore, Sebi started adjudication proceedings against the depository participant for violating sections under Sebi (FPI) Regulations, 2019. Pending these proceedings, JPMC filed a Settlement Application with the market regulator.
Representative of JPMC met with the regulator’s Internal Committee and following deliberations, the Committee recommended settlement upon payment of Rs 22.1 lakh.
The order has been passed after the settlement was vetted by the High Powered Advisory Committee on Settlement and by the Panel of Whole Time Members of Sebi.
JPMC through its e-mail dated June 15, 2023, informed SEBI about the remittance of the settlement amount.
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