Karvy Stock Broking and its chief have been on Sebi’s radar for misusing client securities and funds and violating regulatory guidelines
The Securities and Exchange Board of India (Sebi) has attached Karvy Stock Broking’s bank accounts, demat accounts and mutual fund folios to recover dues worth Rs 15.35 crore on Thursday. Additionally, the regulator has also acted against the former managing director of the brokerage firm, Comandur Parthasarathy, to reclaim an amount worth Rs 9.44 crore.
“Whereas no amount has been paid by the defaulter and there is sufficient reason to believe that the defaulter may dispose of the securities/ instruments in the demat account/s or Mutual fund folio/s held with you and realization of amount due under the certificate would be a consequence be delayed or obstructed,” said Sebi in a notice on September 12.
The brokerage firm has been on Sebi’s radar for quite some time now. It had misused client securities and funds, leading to significant losses to investors. The regulator, in its in-depth investigation, has found that the firm had wrongfully pledged its customers’ securities to obtain loans for its own purposes. Also, it was found that the inappropriate use of funds by the brokerage firm violated regulatory guidelines.
Following this, Sebi took strict actions against the firm and issued an order on April 28, 2023. The order-imposed penalties on the firm and its promoter and managing director, Comandur Parthasarathy.
Upon failure, another notice was issued by the regulator on August 7 this year. Sebi gave a deadline of 15 days for the payment of dues.
The firm and Parthasarathy again failed to pay the penalties leading to Sebi attaching their bank accounts in its recent order.
“No debit shall be made in the said account/ s to the extent of the total dues mentioned above until further orders from the Recovery Officer of SEBI,” said SEBI’s notice.