Home >Companies >News >SAT gives Sebi till Monday to decide on interim relief to Karvy

New Delhi: The Securities Appellate Tribunal (SAT) on Friday asked the Securities and Exchange Board of India (Sebi) to decide by Monday on interim relief to Karvy Stock Broking to allow limited use of power of attorney (PoA). Sebi had barred Karvy from using PoA via its 22 November order after the broker was found to have allegedly diverted clients’ money and indulged in trades not authorised by them.

As per the Sebi order, Karvy had misused client securities by pledging them with various lenders without authorization. The total value of these transactions is estimated to be 2,000 crore, making it one of the largest defaults by a stock broker in India. Some of the securities were transferred, sold off and proceeds transferred towards Karvy’s own real estate business.

The brokerage filed a petition with SAT seeking relief from some of the restrictions imposed by the Sebi as they were making it difficult for it to honour client payout requests.

“The revocation of PoA is creating problems for Karvy in settling trades. Since clarification is sought, we deem it fit and proper that Sebi looks into the matter by giving Karvy an opportunity of hearing and passing final orders by Monday," SAT said in an oral order.

The Sebi counsel reiterated, “The misuse is much larger than the forensic audit. It pertains to total misuse of power of attorney for pledging of client shares. Securities in client demat account are being misused as well as securities from pool account are being transferred to brokerage’s own account."

A Mint story on 29 November said that Karvy is facing challenges in honouring requests of nearly 95,000 clients. The requests include delivery of shares, transfer of securities to demat accounts and payout requests when the trade is settled.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
My ReadsRedeem a Gift CardLogout