Beginning of end for Karvy Stock Broking started in 2018 | Hyderabad News

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HYDERABAD: The Karvy Demat scam may not have come to light until November 22, 2019, after market regulator Sebi issued orders banning Karvy Stock Broking (KSBL) from taking on new clients, but the start of late for the company began long before that.
After numerous complaints from investors about brokers not transferring stocks and money to designated bank and bank accounts, Sebi started changing the rules and commissioning new reports from market stakeholders, which makes it increasingly difficult for brokers to use clients’ stocks and securities for their own use. .
In December 2018 every week.
Then, between March and April, Sebi also started to match the stock ownership records with the exchanges, with the brokers and with the two custodians NSDL and CSDL and also started accounting for the details of the pledged shares with the stock exchanges. custodian records and what brokers disclosed.
Then, in an order of June 20, he prevented all brokers from raising funds by pledging the shares of clients and also ordered the separation and reporting of shares and client funds from those held by the broker. This move exposed brokers like KSBL who were using clients’ shares for their own use.
In September 2019, Sebi also ordered that shares can only be pledged after confirmation by clearing members or clearing companies. In addition to pledging clients’ shares to raise funds, Karvy Group also mortgaged its new head office in the Hyderabad computer center and its head office in Banjara Hills to raise funds. It also mortgaged 10 buildings belonging to the Karvy CMD C Parthasarathy group in Telangana and Karnataka to ICICI Bank.
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