Leading bourse BSE has also declared Karvy Stock Broking as a defaulter and expelled the brokerage house from its membership after a similar action was taken by the National Stock Exchange (NSE). Investors having any outstanding claims against the brokerage can file their claims with the exchange within 90 days from the date of issue of the notice — by February 22, 2021 –, the BSE said in a circular on Tuesday.
“The exchange has declared Karvy Stock Broking Ltd, a corporate trading member of the exchange as defaulter… and also expelled the said trading member… with effect from November 24,” the BSE said. The NSE has also declared the brokerage house as a defaulter and expelled from its membership with effect from November 23.
Karvy had unauthorisedly transferred securities of clients into its demat accounts by misusing PoAs (Power of Attorney) given by its clients. The firm had misused client collateral for its own trades. On Tuesday, Sebi confirmed the ban on Karvy from taking new clients. The regulator passed the final order, a year after passing an interim order wherein the ban on Karvy was imposed for misusing clients’ securities.
The final order comes after the regulator received a forensic audit from the NSE in the matter. In November 2019, the regulator barred Karvy from taking new brokerage clients after it was found that the brokerage firm had allegedly misused clients’ securities to the tune of more than Rs 2,000 crore.
On November 17, the NSE said funds and securities worth Rs 2,300 crore belonging to about 2.35 lakh investors of Karvy had been settled so far.