NSE expels Karvy Stock Broking's membership
The National Stock Exchange (NSE) has declared Karvy Stock Broking Ltd as a defaulter and scrappits membership effective Monday’s market close.
"All members are hereby informed that the Karvy Stock Broking has been expelled from the membership of the Exchange under Rules 1 and 2 of Chapter IV of the NSEIL Rules and has been declared as a defaulter under provision 1 (a) of Chapter XII of Exchange Bye laws w.e.f. November 23, 2020, after the close of market hours," NSE said in a statement.
In November 2019, Karvy had transferred securities worth ₹2,300 crores into its account by misusing the power of attorney given by its clients.
Sebi, in its preliminary findings, held that the brokerage firm had misused client securities, used it for other purposes, and indulged in trades that were not authorized by them.
Karvy had sold clients securities and the proceeds were transferred to related party businesses, such as Karvy Realty Ltd.
Sebi had barred the firm from taking on new clients and limited its use of Power of Attorney for its existing clients. The regulator had also directed the exchanges to initiate disciplinary proceedings against the firm. After which NSE, BSE, Multi Commodity Exchange (MCX), and MSEI had suspended the license of the brokerage firm.
On 17 November NSE said that the funds and securities worth ₹2,300 crores belonging to about 2.35 lakh investors of Karvy Stock Broking Ltd have been settled so far.