Karvy case: 90% of investors recover their values after a quick Sebi action
New Delhi, December 2 () The immediate action of the Sebi market regulator against Karvy Stock Broking Ltd (KSBL) has resulted in about 83,000 investors recovering their securities, which were illegally transferred by the broker to their own account and even They got engaged without any authorization.
With the last transfer of National Securities Depository Ltd (NSDL), almost 90 percent of investors have recovered their securities and the rest will receive it after paying their quotas.
Karvy has taken loans worth Rs 600 million rupees by promising values for more than Rs 2,300 crore from 95,000 clients with lenders.
Of these, 95,000 clients, almost 83,000 of them have recovered their values, which were illegally transferred by the KSBL to their own account.
According to Sebi's instructions and under the supervision of NSE, the securities were transferred from the demat account .... Karvy Stock Broking Ltd was appointed to the demat accounts of the respective customers who paid in full against these securities. The number of such clients that have received securities are 82,599, NSDL said in a circular.
The timely action becomes important, since any delay could have led to the invocation of a promise by the lenders with whom the broker had promised the values of the clients.
According to market experts, Sebi's timely action has also avoided the situation of PMC Bank.
The main stock exchanges NSE and BSE suspended Karvy's commercial license on Monday.
In an order approved on Friday, Sebi said that Karvy transferred unauthorized values of Rs 2,300 crore from more than 95,000 clients, to one of his deferred accounts, by improperly using the PoAs (Power of Attorney) given by his clients.
The demat account was never disclosed by the company in its presentation to the stock exchanges.
Sebi also said that the KSBL forensic audit, initiated by the NSE is in progress and the extent of misuse of customer values will be known after the completion of the forensic audit.
The regulator, through an order approved on November 22, had prohibited KSBL from taking new clients with respect to its stock brokerage activities and also prevented it from using the PoA granted by the clients after it was discovered that the broker allegedly made a misuse of customer values. The order was the result of a preliminary report sent by the NSE on the breaches observed regarding the commitment/misuse of customer values by Karvy. SP BJ RAM