sebi:WTM/PS/70/ISD/JAN/2014
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Prohibition on Karvy Stock Broking Limited, Depository Participant from taking up any new assignment (i.e. not to take up any new clients) for a period of 18 months; no further penalty as prohibition for 18 months and 26 days already undergone.
Provisions invoked
- s. 19
- s. 12
Regulations
- Reg. 3
- Reg. 4(1)
- Reg. 5(1)
- Reg. 3(a)
- Reg. 20A
- Reg. 19
- Reg. 28
- Reg. 52
- Reg. 28(1)
- Reg. 38(2)
- Reg. 20(A)
Parties
- Karvy Stock Broking Limited, Depository Participant (Karvy DP)
Holding
Karvy DP was found to have aided IPO manipulation by opening thousands of fictitious/benami demat accounts and financing key operators, and was prohibited from taking new clients for 18 months, with no further implementation required as the period had already been undergone.
Full text
Page 2 of 54 process of verifying the identity and address of the dematerialized account holders and to close/ freeze the dematerialized accounts where they are unable to do the verification not later than January 31, 2006; to put in place systems and procedures to ensure that in future no non-genuine dematerialized accounts are opened by them. Karvy DP vide the said order was asked to submit a detailed report to SEBI narrating the actions taken by them in this regard and further not to open new dematerialized accounts till the submission of the said report. Karvy DP was also asked to submit an undertaking to SEBI and obtaining a no- objection from SEBI for accepting fresh business as a DP.
Page 3 of 54 September 18, 2006. The Enquiry Officer enquired into the alleged violation of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the ‘SEBI Act’), the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the 'PFUTP Regulations'), SEBI (Depositories and Participants) Regulations, 1996 (hereinafter referred to as 'DP Regulations') and the provisions of the SEBI (Criteria for Fit and Proper Persons) Regulations, 2004 (hereinafter referred to as 'Fit and Proper Regulations').
Page 4 of 54 Table A Entity Direction With effect from Karvy DP Prohibition from opening fresh demat accounts till December 31, 2007 Immediate effect.
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Source: SecMarx — sebi:WTM/PS/70/ISD/JAN/2014. 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.