SEBI bans Karvy Broking for nearly Rs 2,000 crore in defaults

Karvy Stock Broking (KSBL) has been banned by SEBI for client defaults worth around Rs 2,000 crore making it one of the India’s largest cases of equity broker default. In an ex-parte interim order, SEBI banned Karvy from not only taking new clients but also from executing trades for current.

Also read: No misuse of clients’ securities: Karvy

A recent inspection by National Stock Exchange revealed that KSBL transferred a net amount Rs 1,096 crore to its group company Karvy Realty between April 2016 and October 2019. KSBL sold pledged client shares via off-market transfer as its own in five out of nine client accounts amounting to Rs. 228.07 crore in 2019 and transferred stocks worth Rs. 27.8 crore from 156 clients who have not executed a single trade with them.

Rs 116-cr worth stock moved from clients a/c

Stocks worth Rs 116.3 crore were transferred from 291 clients who have not traded with KSBL since June 2019. KSBL sold excess securities (not available in DP account) to the tune of Rs. 485 crore through nine related clients. Further, KSBL has also transferred excess securities to six out of these nine related clients to the tune of Rs. 162 crore till May 2019. Stocks worth Rs 257.08 crore, pledged on behalf of four clients were un-pledged between June and August 2019 and securities worth of Rs 217.85 crores were recovered by KSBL from four out of the said nine client accounts. KSBL has also purchased securities in five out of the respective nine client accounts amounting to Rs. 228.07 crore in 2019.