PR No. 26/2014, Dated – March 18, 2014

Order in the matter of irregularities in IPO in respect of Karvy Stock Broking Limited, Stock Broker

Shri Prashant Saran, Whole Time Member, SEBI, has passed an order dated March 14, 2014 in the matter of irregularities in IPO in respect of Karvy Stock Broking Limited. The order prohibit Karvy Stock Broking Limited (Stock Broker), from taking up any new assignment or contract or launch a new scheme (i.e., not to take new clients/customers) for a period of six months in respect of its business as a stock broker.

SEBI had conducted a preliminary examination, upon noticing certain irregularities with respect to IPO of different companies. A few individuals/ entities (referred to as ‘the key operators’) had opened various demat accounts (referred to as ‘afferent accounts’) in fictitious/ benami names and cornered/ acquired the shares of IPOs in the category of retail investors using these accounts. Pursuant to the allotment, the shares were transferred to the demat account of these key operators and from thereon to ultimate beneficiaries, who were the financiers in the process. It was observed that the “Karvy Group” comprising of – Karvy Stock Broking Limited, Karvy Consultants Limited, Karvy Computershare Private Limited, Karvy Securities Limited and Karvy Investor Services Limited, had allegedly assisted, aided and abetted the key operators in cornering the shares issued in the IPOs.

Source- SEBI

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