SEBI Closes Case Against JP Morgan Chase Bank N.A. After ₹34.42 Lakh Settlement for FPI Regulation Breaches

JP Morgan Chase Bank N.A. has settled enforcement proceedings initiated by the Securities and Exchange Board of India (SEBI) by paying ₹34.42 lakh. This settlement addresses several compliance issues related to Foreign Portfolio Investor (FPI) regulations. 

Details of the SEBI Settlement 

The proceedings were settled under SEBI's settlement framework, allowing JP Morgan to resolve the matter without admitting or denying the findings. SEBI's order indicated three primary compliance failures.  

Firstly, JP Morgan issued FPI licenses to unregulated UK-based entities, violating FPI norms. Moreover, these entities were reclassified incorrectly under new regulations in 2019. Additionally, there was a delay in responding to a merger involving an FPI that affected compliance protocols. 

Violations of FPI Regulations 

As a designated depository participant, JP Morgan granted Category II FPI registrations to 4 UK-based entities not recognised by the UK's Financial Conduct Authority.  

This oversight breached SEBI guidelines related to maintaining regulated FPI status. Furthermore, after the introduction of updated FPI regulations in 2019, these entities were misclassified as Category I FPIs. 

Delayed Response to Merger Activity 

JP Morgan's oversight also extended to delayed action on the merger of Care Super Pty Ltd with Spirit Super.  

Notified on November 1, 2024, the bank took 38 days to recommend new registration, during which 64 trading transactions were executed, contravening compliance mandates. 

Read More: SEBI Proposes Default Nomination and Simplified Rules for Demat and Mutual Fund Accounts! 

Settlement and Non-Enforcement Clause 

Proposing a settlement amount of ₹34.42 lakh, JP Morgan's offer was reviewed by SEBI’s High-Powered Advisory Committee and accepted by a panel of Whole Time Members.  

SEBI received the settlement payment in February 2026, ensuring no enforcement actions will be taken for the cited violations unless settlement terms are breached. 

Conclusion 

The settlement of ₹34.42 lakh by JP Morgan with SEBI signifies a resolution of compliance lapses concerning FPI regulations. Despite no admission of wrongdoing, the bank's timely payment concluded potential enforcement proceedings in this regard. 

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