sebi:WTM/SM/MIRSD/MIRSD-SEC-4/26042/2023-24
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Facts / Headnote
Held KSBL and its CMD C Parthasarathy violated PFUTP Regulations, Stock Broker Code of Conduct and securities laws by misappropriating client funds/securities and diverting pledged proceeds, and held independent directors Noticees 4 and 5 violated PFUTP Regulations; imposed monetary penalties on Noticees 1, 2, 4 and 5 and passed no direction against the remaining noticees.
Provisions invoked
- s. 19
- s. 11(1)
- s. 12
- s. 15H
- s. 15J
- s. 23J
- s. 27(1)
- s. 23D
- s. 11B(2)
- s. 11B(1)
- s. 12A(1)
- s. 12A(2)
Regulations
- Reg. 6
- Reg. 9(f)
- Reg. 3
- Reg. 4(1)
- Reg. 9
- Reg. 9(g)
- Reg. 4(2)(m)
Parties
- Karvy Stock Broking Limited
- C Parthasarathy
- Bhagwan Das Narang
- Ms. Jyothi Prasad
- Karvy Realty India Limited
- Karvy Capital Limited
Holding
KSBL through its CMD misappropriated client securities and funds by unauthorized pledging and diversion to group entities, violating PFUTP and broker conduct norms; penalties were imposed on KSBL, C Parthasarathy and two independent directors, while Noticees 3, 6 and 7 were exonerated for lack of evidence of control or complicity.
Full text
Final Order in the matter of Karvy Stock Broking Limited Page 2 of 88 INZ000172733. KSBL was a member registered with National Stock Exchange of India Ltd. (hereinafter referred to as “NSE”) and the BSE Ltd. (hereinafter referred to as “BSE”) for its stock broking activities. KSBL is also registered as a Depository Participant (in short “DP”) with SEBI registration number IN-DP- CDSL-175-2015 and was a member of National Securities Depository Limited (hereinafter referred to as ‘NSDL’) and Central Depository Services Limited (hereinafter referred to as ‘CDSL’).
Final Order in the matter of Karvy Stock Broking Limited Page 3 of 88 the DP account of clients of KSBL as DP, to ensure that its clients’ operations are not affected. NSDL and CDSL were also directed to allow transfer of securities from DP account no. IN300394-11458979, named KARVY STOCK BROKING LTD (BSE) only to the respective beneficial owner who has paid in full against these securities, under supervision of NSE.
Final Order in the matter of Karvy Stock Broking Limited Page 4 of 88 8. During this whole period since the passing of the Interim Order till November 2020, KSBL had not submitted its reply to SEBI with respect to the allegations and prima-facie observations made in the said Interim Order and only sought adjournments after adjournments on the ground that it was making efforts to arrange funds in order to settle the claim of its clients or by citing other
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Source: SecMarx — sebi:WTM/SM/MIRSD/MIRSD-SEC-4/26042/2023-24. 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.