SEBI and JP Morgan Chase Bank Reach Settlement; Bank to Pay Rs 22.10 Lakh
JP Morgan Chase Bank has reached a settlement with the Securities and Exchange Board of India (SEBI) regarding a case involving alleged violations of Foreign Portfolio Investor (FPI) rules. The bank has agreed to pay Rs 22.10 lakh as part of the settlement, without admitting or denying the findings of fact.
SEBI’s Adjudicating Officer, Asha Shetty, stated in the settlement order that the adjudication proceedings initiated against JP Morgan Chase Bank, based on the show cause notice issued on September 23, 2022, and the supplementary show cause notice issued on December 29, 2022, have now been resolved.
The case stemmed from a letter received by SEBI from JP Morgan Chase Bank in August 2021, notifying the regulator about a delay in reporting a change in material information related to the merger of Fidelity Investments Money Management (FIMM) with its affiliate, Fidelity Management & Research Company (FMRC), which was registered as an FPI.
Upon examining the matter, SEBI found that the merger resulted in the cessation of FIMM, which was the entity registered as an FPI. However, following the merger, FMRC, the surviving entity, continued to operate in the Indian securities market using the name, accounts, and FPI registration of FIMM, despite not possessing a valid FPI registration itself.
SEBI also observed that JP Morgan Chase Bank failed to prevent FMRC from trading in the securities market, despite having information on record that indicated FIMM had merged into FMRC and FMRC lacked a valid FPI registration.
Consequently, SEBI initiated adjudication proceedings against JP Morgan Chase Bank for alleged violations of FPI norms, leading to the issuance of the show cause notice and supplementary show cause notice in September and December 2022, respectively.
JP Morgan Chase Bank subsequently filed a settlement application with SEBI, proposing to resolve the alleged violations by paying Rs 22.10 lakh. The proposed settlement amount was approved by the regulator.
As part of the settlement, JP Morgan Chase Bank has remitted the agreed-upon amount to SEBI, effectively closing the case with the regulatory authority.