Karvy Stock Broking has clarified that the Sebi order in no way prevents it from continuing to transact business on behalf of existing clients as per their instructions and in furtherance of the investors’ best interests.
Karvy Stock Broking clarified that the restriction on onboarding new clients is only for a 21-day period, “subject to us submitting the clarifications and stating our position”.
The company said that a recent routine inspection in August 2019 was carried out by Sebi, the Exchanges and the depositories. Upon submission of the preliminary inspection report by NSE to Sebi, the regulator issued an ex-parte ad-interim order on Friday issuing directives in investor interest.
“The nature of this order is such that by definition it is an interim’ directive and not a final finding. The order itself states emphatically that this is in response to preliminary findings and is subject to further review upon a more comprehensive audit and investigation.
“The order further gives us the right to respond to each and every preliminary observation within a period of 21 days and is thus only a temporary order restraining some actions till December 16, 2019, when we will represent our position to Sebi,” the company said.
“This order, which was issued on the basis of observations made by the NSE during its audit, mentioned a transfer of Rs 1,096 crore over a three-year period to an associate and subsidiary company of Karvy Stock Broking Ltd (KSBL), Karvy Realty. The quantum mentioned is incorrect,” the company said.
It said the promoters did enrich themselves as is being suggested. “Further, we wish to reiterate that all monies transferred from time to time were solely for the ongoing conduct of business in subsidiary firms and not a single penny went to enrich the promoters’ personal funds as is being insinuated,” the company statement said.