The settlement stems from multiple compliance failures linked to the handling of FPIs. The regulator said JP Morgan granted Category II FPI licences to four UK-based firms that were not registered with the UK’s Financial Conduct Authority, rendering them ineligible under prevailing norms. The lapse pointed to gaps in due diligence at the onboarding stage. Sebi also alleged that, following the introduction of updated FPI rules in 2019, the same entities were reclassified as Category I FPIs without verifying their regulatory status. This amounted to a breach of stricter eligibility requirements introduced under the revised framework.
The Sebi also observed that the bank delayed action on a material change involving an FPI following a merger. Despite being informed on November 1, 2024, JP Morgan took over a month to advise fresh registration and restrict trading.