Karvy moves SAT against SEBI order

Karvy Stock Broking (KSBL) has challenged last week’s SEBI order in the Securities and Appellate Tribunal (SAT).

KSBL told SAT that even its existing clients are now facing difficulties in selling their shares or transferring them to other brokers due to SEBI’s order. The matter has been kept ‘high on board’ to be heard further on priority by SAT on Friday. SAT judge told SEBI that it can continue with its probe but see to it that clients do not suffer.

SEBI will reply to Karvy on Friday, lawyers involved with the matter told BusinessLine .

Last week, in an ex-parte order, without giving any hearing to KSBL, SEBI had told depositories NSDL and CDSL that they should be strict on Karvy’s transactions even if it held power of attorney (POA) on behalf of clients and allow transfer of shares from demat account only if they are back by full payment from clients. The order caused panic and a virtual clamp down on clients operations of Karvy.

The brokerage has been accused of pledging client shares with lenders to avail themselves of loan, an arrangement that many clients have refused to have given consent. Pledging of client shares was a common practice but SEBI disallowed it this year. SEBI’s action was primarily based on a probe report by National Stock Exchange, which aid the broker had indulged in various unapproved transactions. Law firm Vishesha Law Services is representing Karvy.

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