sebi:WTM/AB/SEBI/MIRSD/HO/42/2019-20
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Facts / Headnote
Representation disposed of
Regulations
- Reg. 58
Parties
- Karvy Stock Broking Ltd.
Holding
Axis Bank's pledge over Karvy's fully-paid clients' securities is invalid and cannot be invoked, while securities of unpaid clients can be released only on proof of explicit client authorization and to the extent of indebtedness under NSE supervision. The representation dated December 19, 2019 is disposed of on those lines.
Full text
Order in the matter of Karvy Stock Broking Limited- Representations by Axis Bank Ltd. Page 2 of 14 SEBI advised Depositories, as a proactive and interim measure, to take all immediate necessary actions to protect the interest of investors, whose shares have been pledged. Accordingly, based on the information provided by NSE, such client securities that appear to be pledged are therefore under a state of abeyance. You may intimate your pledgee client (DP ID: IN300484/Client ID: 10392275) suitably.”
Order in the matter of Karvy Stock Broking Limited- Representations by Axis Bank Ltd. Page 3 of 14 SEBI by order dated November 22, 2019 is not the same account as that of the appellant implicitly the order has got extended to such accounts because of the sweeping nature of the WTM’s directions to protect the interest of the investors. Hence the action by Respondent No. 3 NSDL is also a consequential one as clearly stated in their communication.
Order in the matter of Karvy Stock Broking Limited- Representations by Axis Bank Ltd. Page 4 of 14 (Respondent No. 2 in the Appeal), NSDL (Respondent No. 3 in the Appeal) and Central Depositories Services Limited (CDSL) (Respondent NO. 4 in the Appeal), on December 19, 2019. During the hearing, the Representor made the representation dated December 19, 2019. During the said hearing, the representatives of NSDL and NSEIL were present. However, KSBL was not present on the said date of hearing. In view of this, the hearing was adjourned to the next day i.e. December 20, 2019. During the hearing held on December 20, 2019, the advocates/representatives of NSDL, NSEIL, KSBL and the Representor were present. During the said hearing, the advocate for KSBL undertook that any money that would be received from the clients whose securities were pledged under the demat account no. 19502787 named as “Karvy Stock Broking Ltd. – Client Account NSE-CM” (hereinafter referred to as “impugned demat account”), would be deposited into a no lien escrow bank account to be opened by NSEIL. Further, in the said hearing, NSEIL agreed to share the data in respect of KSBL's clients as on November 22, 2019, whose securities are pledged through the impugned demat account, with the Representor. On the said date, matter was adjourned for further hearing to be held on January 08, 2020.
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Source: SecMarx — sebi:WTM/AB/SEBI/MIRSD/HO/42/2019-20. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.