Sebi Issues Notices of Demand to ESB and ESN in Karvy Stock Broking Case


Capital markets regulator Sebi on Wednesday sent notices to BSE and NSE stock exchanges asking them to pay more than Rs 5 crore in a matter related to Karvy Stock Broking Ltd (KSBL) and warned of seizure of assets and accounts banks if they fail to make payment within 15 days.

The notices came after exchanges failed to pay the fine imposed on them by the Securities and Exchange Board of India (Sebi).

In an April 12 order, Sebi had fined Rs 3 crore on ESB and Rs 2 crore on NSE for “laxity” on their part in detecting misuse of clients’ securities by KSBL.

The case concerns KSBL’s misuse of client securities worth Rs 2,300 crore, belonging to more than 95,000 clients, by pledging them from a single demat account. The funds raised against the pledge were used by KSBL for itself and its group entities.

KSBL and its group entities used the money to collect Rs 851.43 crore from eight banks/NBFCs.

In two separate notices, Sebi ordered BSE and NSE to pay Rs 3.09 crore and Rs 2.06 crore respectively, plus additional interest, all costs, fees and expenses within 15 days.

These amounts include penalties, interest from April 12 to date and collection costs.

In the event of non-payment of dues, the market regulator will recover the amount by seizing and selling the movable and immovable property of the stock exchanges. In addition, stock exchanges face the seizure of their bank accounts.

Also, the regulator takes the route of arrest and detention in prison to recover the amount.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscriptions to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor


About Author

Comments are closed.