The Securities and Exchange Board of India (Sebi) on Tuesday confirmed the ban on Karvy Stock Broking from taking new clients and directed stock exchanges as well as depositories to take appropriate action against the entity and its directors. The National Stock Exchange (NSE) declared Karvy Stock Broking as a defaulter and expelled the broking house from the membership of the exchange for non-compliance with various regulatory provisions.
Karvy has also been prohibited from alienating any of its assets, except with prior permission of the NSE till the settlement of claims of investors. The final order came after the regulator received a forensic audit report from the NSE.
On November 22, 2019, Sebi banned Karvy Stock Broking from taking fresh business for allegedly misappropriating money and securities belonging to its investors in order to fund its real estate arm, Karvy Realty. The directions issued against KSBL in the ex-parte order passed in November 2019 are operating against it till date, Sebi said in the final order. Karvy neither filed any reply for revocation of interim order or not to confirm the interim direction nor availed opportunity of hearing, Sebi said.
In the various letters seeking adjournment, Sebi said KSBL made submissions that it is transferring securities and funds to its clients. “Such letters and conduct of KSBL show it admits wrongdoing, as alleged in the ex-parte order and therefore, has been taking the steps to remove the effects of its wrongdoing such as requesting more time so as to return the funds/securities to its clients whose securities were unauthorisedly pledged by KSBL,” it said.
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