Karvy Broking retains customer funds
Partha Sinha and Swati Bharadwaj | TNN
Mumbai/Hyderabad: Karvy Stock Broking It is known that not only the clients' shares were illegally compromised, but they also withheld their payments for months after the investors sold through the problematic brokerage firm. Karvy Stock Broking did not respond to a TOI email about customer complaints about the non-transfer of funds to their accounts.
In one case, a US citizen, who offloaded stocks worth Rs 3.8 crore on September 21, is awaiting payment despite promises by Karvy CEO Rajiv Singh That would be done in its entirety.
More than two months ago, president of the University Venture Fund and co-founder of Unitus Capital Geoff Chester Woolley who was Bharat Financial Inclusion (formerly SKS Microfinance) director until his recent merger with IndusInd Bank, sold 27,000 IndusInd Bank shares worth Rs 3.8 crore. He’s still waiting for the proceeds to be credited to his account. “I instructed Karvy to sell (those) shares and send the proceeds to my US bank account,” Woolley told TOI in an email.
On September 21, Karvy Stock Broking sold the shares and after deduction of charges was to transfer nearly Rs 3.83 crore to his US bank account. “But the proceeds were never sent to my bank. After two weeks of chasing Karvy for the funds, they basically went silent on the many inquiries made,” said Woolley. He said he had dealt with Karvy Stock Broking previously also, but had never faced such a problem.
Rs 3.8-crore appears in my online demat account as cash, but it does not allow me to transfer funds or buy other securities. That is still the situation today after almost 80 days, said Woolley, who has filed a complaint with Sebi, which has been shared with NSE.
Even after directly contacting Singh and sending a representative to Karvy Stock Broking ’s office, all he heard from the broker were promises to pay at a future date, which invariably got postponed to a new date.
In the last mail he got from Singh, earlier this week, he was promised to be paid by December 25. “Unless Santa provides Karvy a present for Christmas, I assume Karvy will not pay,” Woolley said. Woolley is just one of the thousands of Karvy Broking Customers waiting for their payments. Many of the anxious and unhappy customers have been expressing their anger on social media, especially on Twitter.
Recently, Karvy group CMD C Parthasarathy had told the media that the total dues to its clients were about Rs 25-30 crore, which would soon be met and it was business as usual at the broking house.
The declaration of Parthasarathy came after the Sebi market regulator, on November 22, prohibited the brokerage firm from taking new clients for non-segregation of the funds and values of the clients, and also for compromising the actions of the clients to raise money, which was channeled to other companies in the group.
According to market players, Sebi has so far detected misuse of clients ’securities by Karvy to the tune of about Rs 2,300 crore. “The regulator should also look at the misuse of clients’ money by the broker, ”said an official at a broking house.