The National Stock Exchange has said that it has settled claims worth Rs. 2,300 crore of nearly 2.35 lakh Karvy Stock Broking Ltd investors. Investors with fund balances up to Rs. 30,000 due from Karvy have been settled, the NSE said.
On November 22, 2019, market regulator SEBI had banned Karvy for default on client dues worth more than Rs. 2,000 crore.
Karvy Stock Broking Ltd was disabled (trading rights withdrawn) on December 2, 2019, the NSE said.
The exchange has now said that it has transferred securities to respective clients, invoked bank guarantees deposited with clearing corporations and liquidated securities held by Karvy Group.
“While disciplinary proceedings are underway, funds and securities of approximately Rs. 2,300 crore belonging to about 2,35,000 investors have been settled so far, with efforts focussed on settlement of small investors. Investors with fund balances up to Rs. 30,000 due from Karvy Stock Broking Ltd have been settled,” NSE said.
SEBI had found that Karvy misused the power of attorney (PoA) given to it by its clients for buying and selling of shares.
Instead, SEBI alleged that Karvy had used the PoA to divert client shares into its demat account and further pledged those shares to avail itself of loan.
As an immediate reaction, SEBI had asked Karvy to reverse the pledged shares.