SEBI to decide on interim relief to Karvy by Monday: SAT

The Securities and Appellate Tribunal (SAT) has asked SEBI to decide on giving interim relief to Karvy Stock Broking by Monday. SAT has asked SEBI to consider allowing Karvy limited use of power of attorney (PoA) to enable the brokerage firm to settle trades of existing customers.

“The revocation of PoA is creating problems for Karvy in settling trades. Since clarification is sought, we deem it fit and proper that Sebi looks into the matter by giving Karvy an opportunity of hearing and passing final orders by Monday,” SAT said in an oral order.

SEBI responded to SAT saying, “The misuse is much larger than the forensic audit. It pertains to total misuse of power of attorney for pledging of client shares. Securities in client demat account are being misused as well as securities from pool account are being transferred to brokerage’s own account.”

Last week, in an ex-parte order, without giving any hearing to KSBL, SEBI had told depositories NSDL and CDSL that they should be strict on Karvy’s transactions even if it held PoA on behalf of clients and allow transfer of shares from demat account only if they are back by full payment from clients.

KSBL told SAT that even its existing clients are now facing difficulties in selling their shares or transferring them to other brokers due to SEBI’s order. A SAT judge told SEBI that it can continue with its probe but should see to it that clients do not suffer.