Questions the role of banks; claims no malafide intention on its part

Our Bureau

"This is baseless and simply based on the concerned bank along with the said individuals who seemed to have acted in collusion and now shifting the blame."

Hyderabad, April 28

The Karvy Group has refuted charges made by the Securities and Exchange Board of India in its interim order barring the group from depository participant and other services.

Karvy Stock Broking Ltd (KSBL) was named as one of the 85 entities that had acted as a financer of the master accountholders who appear to be the ultimate beneficiaries in the IPO scam. The order refers to KSBL as financer to one Mr D.B. Mehta in the NTPC issue.

In a press release, Karvy said KSBL had never financed any IPO customer till date. Neither KSBL nor any of Karvy associate companies financed the said investor for the issue.

"This investor has a secondary market trading account with KSBL Mumbai branch, and he had transferred shares into our pool account on the day the securities were listed and sold the shares in the market. SEBI appears to have mistaken the transfer of securities into our pool account by a customer, who was subsequently paid the proceeds, as a wrongful act of Karvy," the release said.

SEBI had alluded that the certificates of introduction, issued by bankers for DP accounts, were forged and were issued with the connivance of Karvy. "This is baseless and simply based on the concerned bank along with the said individuals, who seemed to have acted in collusion and now shifting the blame. The fact that the collusion of the banks with these individuals can be borne out of the fact that all these fictitious individuals were given loans and the refunds credited to the said accounts. If these bank certificates were issued without the knowledge of the concerned bank, then how did these banks issue loans to such applicants without a bank account and how did they credit the refunds, either given piecemeal or in a consolidated form, to respective loan accounts?" Karvy pointed out.

No malafide intent

Further, according to Karvy, "Should Karvy have acted with a malafide intent or they have been benefited unduly, then they should have received the benefit either by way of shares or funds by way of profit realised on these shares. SEBI has all means to verify whether such benefits have been received and has not identified even a single case of such benefits being accrued. Karvy has not received any undue benefits whatsoever."

Karvy also said, "We believe that the inspection of our operations undertaken by the depositories or SEBI did not reveal any serious violation, especially those with a malafide intent."

(This article was published in the Business Line print edition dated April 29, 2006)
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