Financial Daily from THE HINDU group of publications
Saturday, May 27, 2006
Financial Daily from THE HINDU group of publications Saturday, May 27, 2006 |
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Regulatory Bodies & Rulings Markets - Financial Services Industry & Economy - Economic Offences Our Bureau
Mumbai , May 26 SEBI on Friday barred Karvy group entities from carrying on several of its businesses including depository participant, share registrar and proprietary trading with immediate effect for its role in the IPO scam. In its order issued late Friday, SEBI barred Karvy's stock broking subsidiary Karvy Stock Broking Ltd (KSBL) from taking fresh DP business. "KSBL has conducted themselves in a manner unbecoming of a registered securities market intermediary. This coupled with the role of the group in the whole IPO process in what appears to be a group exercise casts its own reflections on the broking functions of KSBL as well," the order by SEBI Wholetime Member Mr G. Anantharaman said. KSBL is also barred from trading in proprietary accounts. This would imply that KSBL can continue its broking business for its clients. The Group's share registrar and share transfer agent arm Karvy Computershare Pvt Ltd (KCPL) was directed not to act as a registrar to any issue and as share transfer agent, "pending enquiry and passing of final orders, except for acting on the instructions of existing beneficial owners, so that the interests of existing BOs (beneficial owner) remain unaffected."
Demat account transfer
SEBI also asked Karvy to transfer the demat account of an existing BO to another SEBI-registered DP, on request. KCPL is directed not to act as a registrar to IPOs and as a share transfer agent, pending enquiry and passing of final orders. However, KCPL can continue to act as a transfer agent to mutual funds, the order said. SEBI said the current order gives only a prima facie finding as to the necessity of passing these directions at this stage and accordingly all contentions are left open to be decided by the Enquiry Officer and in subsequent proceedings pursuant to his report. However, SEBI has decided to drop its action against Magnum Equity Services Ltd (MESL) and Jhaveri Securities Pvt Ltd (JSPL). MESL had acted only as a broker for Mr Dushyant N. Dalal for transaction of shares of Shoppers' Stop and not as a financier, the order said. MESL was prima facie identified as one of the financiers of the master account holders and an ultimate beneficiary of the shares cornered by the key operators in various IPOs during the years 2003-2005. Following preliminary findings, MESL was directed not to buy, sell or deal in securities market including in IPOs, directly or indirectly, till further directions. JSPL was prima facie identified as one of the key operators in respect of the shares cornered in various IPOs during the years 2003 to 2005. Thereafter, JSPL was directed not to buy, sell or deal in securities including in IPOs, directly or indirectly, till further directions. SEBI said that JSPL had merely acted as a broker on behalf of its retail clients and the shares received in its BO (beneficial owner) account were delivered by its clients towards their sale obligations. Therefore, there is no need to continue interim directions against JSPL.
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