Karvy Stock Broking: SAT Asks NSE To Pass Order on Trading Suspension by 6th December
The Securities Appellate Tribunal (SAT) has reportedly asked Karvy Stock Broking Ltd or Karvy to approach National Stock Exchange (NSE)'s disciplinary committee on revoking the trading suspension. Separately, the Tribunal also asked the Securities and Exchange Board of India (SEBI) to hear Bajaj Finance Ltd, a client of Karvy, and pass an order by 10 December 2019. SAT also ordered suspension of any further transfer of securities that Karvy Stock Broking had pledged with the lenders. Karvy has approached the SAT after NSE, Bombay Stock Exchange (BSE) and Multi Commodity Exchange (MCX) on Monday suspended its trading licence across all segments of equity, cash, commodities and currency on regulatory concerns. 
 
According to a report from the Mint, after hearing Karvy's representation, NSE's disciplinary committee will pass final order on whether the trading suspension stays or is revoked by 6th December. The petition by Karvy against SEBI would now be heard on 13 December 2019.
 
In a separate order, the SAT bench of Dr CKG Nair and justice MT Joshi, asked SEBI's whole-time member (WTM) to hear Bajaj Finance and pass an order by 10th December. Bajaj Finance has approached SAT contesting an order passed by SEBI on 22 November 2019 barring trading accounts of Karvy. 
 
In its contention, Bajaj Finance, represented by senior counsel Janak Dwarkadas, says since  Karvy  violated certain clauses of their loan agreement and withdrew beyond the sanctioned amount, on 20 November 2019, it had issued a loan recall notice to the brokerage seeking refund of its full outstanding loan of about Rs345 crore, including interest and charges. Bajaj Finance was planning to invoke the pledge, however, on 22 November 2019, SEBI prohibited Karvy from transferring securities and the Bajaj group company could not invoke its pledge.
 
In its order passed on Tuesday, the SAT says, "...we find that the impugned order notes that Karvy had raised funds pledging securities from banks and non-banking finance companies (NBFCs) and therefore was aware that rights of those entities would be impacted by the said order. As such, even if they could not be heard while passing the impugned order at least on their representation they were entitled to be heard...we are of the considered view that the impugned order has prejudiced and adversely affected the rights of the appellant as a bonafide lender." 
 
Last month, market regulator SEBI found that Karvy Broking had illegally diverted nearly Rs2,000 crore of more than 95,000 clients’ shares to its own accounts. 
 
Based on a preliminary report from NSE, the WTM of SEBI had issued an ex-parte ad interim order on 22 November 2019 restraining Karvy from taking new clients in respect of its stock broking activities and also prevented the brokerage from using the power of attorney (PoA) given by its clients. Later, on 29th November, the SAT asked SEBI to consider request of Karvy and pass appropriate orders. However, on the same day, SEBI disposed all contentions made by Karvy and barred the brokerage from using PoA of its clients. 
 
In an email to its clients on Monday, Karvy had said, "All of you must be aware of the fact that the NSE and the BSE have suspended trading by us on all stock exchanges. We have received this communication from the NSE only at 8.27am, in the morning, and were informed that we have been temporarily suspended under rule 13 A (a) of the NSEIL Rules, with effect from 2 December 2019, on account of regulatory concerns. We are yet to receive a show cause notice from them, and we propose to respond to the show cause notice appropriately. The BSE has also sent an intimation to us about the suspension of trading. We are approaching the SAT to intervene." 
 
Last month, investors across the country complained on social media to the prime minister's office, (PMO), finance ministry and market regulator, SEBI, seeking their payouts.
 
Reports suggest that Karvy is facing a liquidity crunch due to a number of bad client trades on castor seeds. The Hyderabad-based financial services group is facing liquidity problems as some clients have defaulted on payments after incurring huge losses on trades in castor seed contracts. The payments contagion now seems to have spread to other investors who are complaining that Karvy is not making the payments.
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    COMMENTS

    sudhir apte

    1 week ago

    How is it that company of BF's repute didn't properly scrutinized the security offered by Karvy? Is greed of higher returns getting to them also? Whom should the investors look up to as safe bets? I don't think decision will go in favour of BF. Recovering their money from Karvy is not going to be easy.

    REPLY

    Bipin Kochar

    In Reply to sudhir apte 5 days ago

    The depositories are responsible for verifying and honoring all contracts or pledges.

    Nakul Kumar Reddy

    1 week ago

    Parthasaradhy sir told me that today evening is the dead line ,after that we will do our work .

    Sandeep More

    1 week ago

    All the signatories to the transaction have to be penalised heavily, though personally and sentenced to rigorous imprisonment without handing over the usual adjournments for decades

    Onkarnath Adiga

    1 week ago

    Unbelievable breach of client's trust. Should be dealt with iron hands without any leniency. Advise Karvy to help existing client to transfer securities to some other DPs.

    Nakul Kumar Reddy

    1 week ago

    Suspend right now,useless people
    Notorious criminals ..

    RBI moves NCLT seeking insolvency process against DHFL
    The RBI on Friday filed an application in the National Company Law Tribunal's Mumbai bench for initiation of corporate insolvency resolution process against the cash-strapped Dewan Housing Finance Corporation Ltd (DHFL).
     
    There would be a debt moratorium on DHFL as long as the insolvency process undergoes, an Reserve Bank of India (RBI) statement said.
     
    The apex bank filed the application for initiation of corporate insolvency resolution process against DHFL under several clauses of Section 227 and Section 239 of the Insolvency and Bankruptcy Code, 2016 along with few rules under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers) Rules, according to the statement.
     
    The move comes a week after the RBI appointed an advisory committee to advise the administrator of the private sector DHFL. On November 20, it had superseded DHFL's board of directors and appointed R. Subramaniakumar as its administrator. 
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Dillip Swain

    2 weeks ago

    arrest dhfl management.

    Nakul Kumar Reddy

    2 weeks ago

    File case against them, I will give u full support .
    They want money only .
    File case.

    Investors, bankers fear Karvy Broking's default
    The reports of Karvy Broking's possible default has sent jitters across the investor and banking community, following the market regulator Sebi barring it from taking on new clients over alleged misuse of clients' securities.
     
    This comes after defaults of several brokerage firms like Fairwealth, BRH Wealth Kreators, Guiness, Kassa Finvest, and Ficus Securities, which had cost the customers dearly.
     
    Experts point out that one of the chief causes of these default is that the regulators, clients, customers and investors have no access to actual related party and counterparty transactions carried out by the brokers.
     
    "Currently, brokers are required to disclose their proprietary trading status to the exchanges and Sebi. However, transactions with related parties are nowhere captured in the scheme of things, except at the MCA. In any case, regulators, clients, customers and investors have no access to actual related party and counterparty transactions carried out by the broker," said Jimeet Modi, Founder & CEO, Samco Securities.
     
    He added that there is no framework for approval or processing of related party transactions like that is required in the Companies Act, 2013. Had these brokers disclosed that they had dealings with related parties, exchanges and auditors would have taken note of such dealings to investigate further and could have identified defaults much earlier.
     
    However, Karvy Stock Broking has clarified that the Sebi order in no way prevents it from continuing to transact business on behalf of existing clients as per their instructions and in furtherance of the investors' best interests.
     
    The company has also clarified that the restriction on new clients is only for a 21-day period, "subject to us submitting the clarifications and stating our position".
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Dillip Swain

    2 weeks ago

    karvy is a born lootera group

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