NEW DELHI: Markets watchdog Sebi on Tuesday confirmed its ban on the acqusition of any new clients by Karvy Stock Broking Ltd (KSBL), going on to direct the stock exchanges as well as depositories to take appropriate action against the entity and its directors.
The regulator’s final order passed on Tuesday comes an entire year after it had imposed a ban on KSBL for misusing clients’ securities. KSBL has also been prohibited from alienating any of its assets, except with prior permission of the National Stock Exchange (NSE), till the settlement of claims of investors.
The final order comes after the regulator received a forensic audit report from the NSE in the matter and the stock exchange has already expelled KSBL from its membership and declared the brokerage house as a defaulter. The directions issued against KSBL in SEBI’s ex-parte order passed in November 2019 have been operating against it till date, Sebi noted, adding that the orders passed in the interim order stand.
“Transfer of funds/ securities made by the KSBL to its clients subsequent to Sebi order dated November 22, 2019, would not absolve KSBL or its directors from violations of the provisions of the securities laws, as have been found in the forensic audit report received in the matter,” it pointed out.
KSBL has neither filed any reply for revocation of interim order nor to prevent the confirmation of the interim direction nor availed opportunity of hearing, it added. SEBI said that KSBL made submissions that it is transferring securities and funds to its clients. “Such letters and conduct of KSBL shows that it admits the 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,” it said.