Financial Daily from THE HINDU group of publications
Saturday, Apr 29, 2006
Financial Daily from THE HINDU group of publications Saturday, Apr 29, 2006 |
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Industry & Economy - Economic Offences Markets - Regulatory Bodies & Rulings Our Bureau
On the defence KYC norms were fulfilled Only around eight per cent of total accounts opened by the sub-brokers were of suspicious nature
Hyderabad , April 28 Shocked over the SEBI order barring it from depository participant (DP) and other market intermediary services, Karvy Group is still grappling to understand its exact implications on its business prospects. However, a major relief to Karvy came on Friday morning in the form of a revised SEBI order that permitted Karvy Stock Broking to trade on behalf of its retail clients on both BSE and NSE but barred it only from carrying on proprietary transactions. "We are victims of a well orchestrated fraud perpetrated by a handful of sub-brokers. The SEBI order is very harsh and unfortunately, the regulator did not provide us an opportunity to clarify our role vis-a-vis the allegations," the Karvy Chairman, Mr C. Parthasarathy, said. Addressing newspersons here on Friday, he said Karvy has ensured collection of all the relevant documents, established proof of identity and address of investors while opening DP accounts. The KYC (know your customer) norms, prima-facie, were fulfilled. Karvy would clarify its position and appeal against the SEBI interim order shortly, he said. "When we read the SEBI order last night, we were worried at the emerging situation since it barred us from carrying on stock broking activities altogether. The relief came in the form of SEBI clarification in the morning today and we were only barred from the proprietary transactions. Since such transactions account for a miniscule portion of our total stock broking activities, the retail investors of us are not going to be affected," he said. Reacting to another SEBI order on Friday morning that advised the customers of Karvy Depository to switch over to other DP, he said, "It is the investors' prerogative. However, we are confident that our DP customers would not prefer to leave us since our services are amongst the best in the industry, which helped us emerge the largest DP with 7.5 lakh accounts." Terming that only 65,000 accounts aggregating to around eight per cent of total accounts opened by the sub-brokers were of suspicious nature and confined to two branches only, Mumbai and Ahmedabad, out of 510 branches, Mr Parthasarathy said, "Our submission to the regulator is that whatever happened was not the representative sample of the total clientele that we have." Another blow for Karvy Group is the SEBI order barring Karvy Computershare, a leader in registrar and share transfer agent business, from taking up new assignments apart from those already contracted for. This Karvy outfit currently services about 22 million investor accounts and 350 corporates and mutual funds. Stating that Karvy has not lost any customer on account of the IPO scam, Mr Parthasarathy said, "We will have to prove our credibility. We will also have to ensure that the retail investors are not affected in any manner by virtue of any order that SEBI passes on us."
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