MUMBAI: A ban by India’s market regulator on Karvy Stock Broking from taking on new clients and executing trades for allegedly misusing client securities has unnerved the country’s retail investors.
The Securities and Exchange Board of India (SEBI) barred Karvy on Friday after a preliminary investigation by the National Stock Exchange (NSE) showed the brokerage pledged and sold some of its client securities to raise funds for its own use, without client authorisation and in violation of new rules.
Karvy said in a statement over the weekend that there was no “mis-utilisation” of client securities.
NSE had been investigating trades at Karvy following several complaints by investors who said the brokerage was not granting fund transfer requests.
A total of close to 20 billion rupees ($278.67 million) is at stake, according to SEBI, including about 10.96 billion rupees transferred by Karvy to its group company Karvy Realty Pvt Ltd.
The Karvy Group serves 70 million individual investors and provides investment advice to more than 600 companies, according to its website.
