sebi:ORDER/NH/RJ/2024-25/30635-30641
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Facts / Headnote
Violations established against Noticees 1-7; penalties imposed under Sections 15HA, 15HB, 15E, and 15D(b) of the SEBI Act (specific amounts not stated in excerpt)
Provisions invoked
- s. 11B
- s. 11
- s. 15
- s. 19
- s. 12A
- s. 15H
- s. 15J
- s. 15D
- s. 15E
Regulations
- Reg. 2(c)
- Reg. 3
- Reg. 4(1)
- Reg. 6
- Reg. 8
- Reg. 22
- Reg. 3(a)
- Reg. 18
- Reg. 18(22)
- Reg. 4(2)(q)
Holding
Noticees 1 to 5 violated Clause E(3)(d) of the SEBI Circular dated November 17, 2016 by subscribing to units of schemes holding defaulted DHFL securities between June 23, 2020 and July 03, 2020 when there was a likelihood of significant change in valuation due to impending sale, without such information being communicated to investors. Noticees 6 and 7 violated Clause 2 of Fifth Schedule to MF Regulations by failing to provide adequate and timely information to investors about the change in valuation of defaulted securities/sale of DHFL securities.
Full text
Adjudication Order in the matter of JM Financial Mutual Fund Page 2 of 86 as “DHFL”) which had matured in the year 2019. It was observed that SEBI vide Circular dated June 23, 2020 (hereinafter referred to as “SEBI Circular”) had allowed transactions in matured downgraded securities, which paved the way for the sale of defaulted securities. Since the defaulted securities carried a ‘Nil’ valuation in the schemes, the entire sale value qualified as a gain for the fund and hence, there was a jump in the NAVs of the schemes. In this background, JM Financial Mutual Fund /JM Financial Asset Management Limited (hereinafter referred to as “JMMF”/ “AMC”) was asked to provide necessary details regarding its schemes.
Adjudication Order in the matter of JM Financial Mutual Fund Page 3 of 86 Table 2 Sr. No. Name of Scheme holding DHFL securities NAV of Direct Growth option on July 3, 2020 (Friday) NAV of Direct Growth option on July 6, 2020 (Monday) Increase in NAV in %
Adjudication Order in the matter of JM Financial Mutual Fund Page 4 of 86 Sr. No. Name of the Scheme No. of investors Name of investors and their relation with AMC/JMMF1 3) Swarn Lata Katoch, Mother of CEO (Noticee No.2)
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Source: SecMarx — sebi:ORDER/NH/RJ/2024-25/30635-30641. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.