Market regulator SEBI has seized bank accounts, demat accounts and mutual fund folios of Karvy Stock Broking. The market regulator has taken this action to recover Rs 15.34 crore. The Securities and Exchange Board of India (SEBI) has issued separate orders in this regard. The market regulator has also seized the bank and demat accounts of the former promoter and managing director of the brokerage house to recover Rs 9.44 crore.
SEBI has taken this action after the brokerage firm and its head did not pay the penalty. SEBI had imposed a fine on the brokerage firm and its head in an order issued on April 18, 2023. After this, the amount of interest and recovery cost have also been added to it. The market regulator imposed this fine after finding the brokerage house guilty of misusing the securities and funds of the clients. The regulator said that Karvy has completely failed in its role as a stock broker.
SEBI Chairperson Madhabi Puri Buch had cited the fraud committed by this brokerage house and said that the market regulator will not allow any other incident like Karvy Broking in the stock market. Buch had said after the SEBI board meeting in March 2023, ‘Now any other incident like Karvy will happen over our dead bodies.’ According to the recent orders of SEBI, a demand notice was sent to the brokerage firm and its former chief on August 7, 2024.
The market regulator says that since the brokerage firm and its former chief have not paid the fine, it can be assumed that they may remove their securities/instruments from bank accounts, demat accounts or mutual fund folios. If this happens, the recovery amount may be hindered or delayed. Therefore, the regulator has decided to seize their accounts.