Custodian bank JP Morgan Chase Bank N.A. settled an enforcement case with India’s Securities and Exchange Board of India (SEBI) after paying Rs 22.10 lakh (approximately $26,500) over alleged breaches of the country’s Foreign Portfolio Investor rules, a settlement order published by the regulator shows.
The matter stemmed from a delayed notification of a merger between Fidelity Investments Money Management Inc. (FIMM), a registered FPI, and its affiliate Fidelity Management & Research Company LLC (FMRC). After the merger, the surviving entity, FMRC, continued trading in Indian markets under the name, accounts and FPI registration of FIMM, which had ceased to exist.
FMRC did not hold its own FPI registration.
The DDP’s role
SEBI identified JP Morgan Chase Bank N.A. as the Designated Depository Participant (DDP) that informed the regulator in August 2021 about the delay in disclosing the merger. The regulator then examined whether the bank had enough material on record to prevent the unregistered surviving entity from continuing to trade.
SEBI concluded that JP Morgan had material showing the merger had occurred but did not stop FMRC from accessing the market. The regulator issued show cause notices in September and December 2022 before the bank filed a settlement application.
The matter was settled “without admitting or denying the findings of fact,” according to Business Standard.
SEBI’s focus extended beyond the FPI itself to the intermediary’s obligation to catch entity-level changes before they become market-access problems.
In practical terms, a merger switched the legal identity behind a trading account faster than the firm updated the registration tied to it. SEBI treated that mismatch as material, even absent any suggestion of market manipulation or fraud.
The case underlines SEBI’s scrutiny of FPI registration status, ownership changes and disclosure timing, especially where cross-border mergers alter the identity of the entity actually trading in Indian securities.
