The Hindu Business Line : SEBI bars Karvy, 23 other entities

In the dock
Ban on several entities including HDFC Bank, IDBI Bank, ING Vysya Bank and Motilal Oswal Securities from opening fresh demat accounts.
The regulator also pulled up NSDL and CDSL for `grave management lapses'.

Mumbai , April 27

SEBI on Thursday came down heavily on stock market intermediaries by banning several entities including Karvy group of companies, Pratik DP and Indiabulls Securities, for their alleged involvement in the IPO allotment scam. SEBI has also barred several entities including HDFC Bank, IDBI Bank, ING Vysya Bank and Motilal Oswal Securities from opening fresh demat accounts.

In an interim order issued today after the second round of investigations, the capital market regulator has banned 24 entities from buying and selling securities till further orders.

Common address

SEBI also said 15 Depository Participants at National Securities Depository Ltd (NSDL) including Kotak Securities, Citibank, ICICI Bank, Bank Paribas and IndusInd Bank had more than 500 demat account holders sharing the common address.

It asked NSDL to conduct inspection on whether all the demat account holders are genuine. NSDL has also been asked to check whether the Know Your Customer norms of SEBI have been duly complied with and take action against suspect accounts on verification.

Analysts felt the SEBI order was akin to capital punishment for the entities involved in the securities market scam.

"In view of the detailed findings, Karvy DP and Pratik DP prima facie do not appear to be fit to deal in securities market as SEBI-registered intermediaries. Appropriate quasi-judicial proceedings are being initiated against the two DPs," the 252-page order issued late in the evening said.

SEBI said the other business groups of Karvy appear to have acted in concert in the gamut of IPO manipulations. "I further direct Karvy Stock Broking Ld, Karvy Computer Share PVT Ltd, Karvy Investor Services and Karvy Consultants not to undertake fresh business as registrar to the issue and share transfer agent," Mr G Anantharaman, Whole-Time Member, SEBI, said.

NSDL, CDSL pulled up

The regulator also pulled up NSDL and CDSL for `grave management lapses'. The findings revealed "contributory negligence" on the part of the depositories and their managements.

"The promoters of NSDL and CDSL are directed to take all appropriate actions including revamping of management which clearly has allowed matters to come to such a sorry pass," the order said.

The order, to be treated as a `show-cause notice', has given 15 days time to the parties named for filing objections.

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