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.
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