SEBI Passes Settlement Order in Respect of JP Morgan Chase Bank after payment of Rs 22.10 lakh

SEBI Passes Settlement Order in Respect of JP Morgan Chase Bank after payment of Rs 22.10 lakh

The Securities and Exchange Board of India (SEBI) has passed a settlement order in respect of JP Morgan Chase Bank in a case pertaining to violation of SEBI Foreign Portfolio Investors) Regulations, 2019 (FIP Regulations).

The SEBI had received a letter/email dated 9 August, 2021 from the Designated Depository Participant – J.P. Morgan Chase Bank N.A. (JPMC/Noticee) wherein SEBI was informed about the delay in intimation of change in material information (i.e., Merger) of Fidelity Investments Money Management Inc. (FIMM’, which was registered as FPI, with its affiliate Fidelity Management & Research Company LLC (FMRC).

Pursuant to receipt of the communication, SEBI conducted an examination regarding the delay in intimation of change in material information.

It was observed that the merger of FIMM with FMRC resulted in cessation of FIMM, an entity which was registered as FPI. However, after merger, the surviving entity i.e., FMRC, which had not obtained FPI registration, operated in the Indian securities market under the name, accounts and FPI registration of FIMM.

It was further observed that JPMC failed to prevent FMRC from trading in securities market despite having material on record that indicated that FIMM had merged into FMRC and FMRC did not have a valid FPI registration. In view of the same, SEBI initiated adjudication proceedings against the Noticee for violating the provisions of the SEBI Act, 1992 and 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.

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 was 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 15 June, 2023, informed SEBI about the remittance of the settlement amount.

The SEBI in its order observed, “Accordingly, in terms of regulation 23(1) of the Settlement Regulations, it is hereby ordered that the instant adjudication proceedings initiated against JPMC vide SCN dated 23 September, 2022 and SCCN Dated 29 December, 2022 is disposed of in terms of the above accepted settlement terms.”