NEW DELHI: As many as 30 stockbrokers, including Modex International Securities and Karvy Stock Broking, have been expelled by the National Stock Exchange (NSE) for misusing their clients’ funds over the past six years.
The exchange made these decisions between July 2017 and March 2022 after these brokers failed to comply with NSE guidelines, according to an update available from the exchange.
These stockbrokers were declared defaulters for non-compliance with stock exchange regulations.
In addition, they were expelled from the fellowship.
Additionally, the exchange imposed monetary penalties on more than 400 stockbrokers and issued warnings to more than 700 stockbrokers for non-compliance with the guidelines during the reporting period.
Under the NSE guidelines, stockbrokers are required to fulfill their obligations and must not engage in misconduct or unprofessional conduct, among other things.
Besides Modex International Securities and Karvy Stock Broking, NSE expelled Anugrah Stock & Broking, Fairwealth Securities, Kaynet Finance, BMA Wealth Creators, Allied Financial Services, CM Goenka Stock Brokers and Omkam Capital Markets.
After conducting an inspection for the period March to December 2019, the exchange expelled Modex International Securities in September 2020, for embezzlement of client funds and securities, loss of profits, non-settlement of client accounts, falsification of books and failure to resolve investor complaints.
Additionally, capital markets regulator Sebi issued an interim order in April 2020 against Modex International Securities and its two administrators for misusing client funds and securities.
In addition, a confirmatory order was passed by the regulator in September 2020 in this regard.
Additionally, a case is pending against Modex International Securities in the Delhi High Court.
In their plea to the court, 19 investors alleged that the broker stole their valuable lifetime savings to the tune of Rs 28.5 crore and further deprived them of their future income in terms of dividends/bonus/redemption, among others.
These petitioners, mostly elderly, alleged that the overall size of the fraud is much larger, around Rs 400 crore the investors cheated around Rs 300 crore.