Market regulator SEBI has canceled the Certificate of Registration of Karvy Stock Broking Ltd (KSBL) for raising funds by pledging client securities and diverting the funds so raised to related entities. SEBI observed that KSBL had pledged client securities amounting to ₹2,700 crore in violation of its rules.

“A stock broker plays a critical role in the securities market as it acts as an interface for retail investors and is therefore required to maintain high standards of integrity and fairness in the conduct of its business dealings and uphold the trust reposed by investors who hold their funds and securities with it. As a regulator of the capital markets, SEBI has the duty to safeguard the interest of investors and ensure that their rights are protected,” SEBI order said.

Karvy has already been declared a defaulter and expelled by the BSE on November 24, 2020, and by the NSE on November 23, 2020.