Sebi bans Karvy Stock Broking from new IPO work for 1 year

Sebi bans Karvy Stock Broking from new IPO work for 1 year

In a big blow to Karvy Stock Broking (KSBL), market regulator Securities and Exchange Board of India (Sebi) has ordered KSBL not to undertake new primary market assignment for the next one year.

“I direct the noticee, KSBL, not to undertake any new primary market assignments, including acting as a syndicate member or providing any syndication services (procuring initial public offering applications and bidding in IPOs), directly or indirectly, in IPOs, for a period of one year,” Sebi whole-time member Prashant Saran said in an order.

Sebi, however, has allowed KSBL to continue with primary market activities that were taken before the order on Monday, June 15, 2015.

The Sebi order follows directions/observations by the Securities Appellate Tribunal (SAT) issued on January 21, 2015, in which SAT directed Sebi to pass an appropriate order based on the merits as expeditiously as possible and preferably within a period of four months. KSBL filed two appeals (one in its capacity as a DP and other as a stock broker) and KCPL filed an appeal against the Sebi order dated June 22, 2007, before the SAT. The appeals were disposed of by SAT in an order dated June 30, 2008, whereby the matters were remanded to Sebi with a direction to pass three separate orders on the three show cause notices issued.

The matter relates to an investigation conducted by Sebi into the alleged irregularities in the transactions in the shares that were issued in the Initial Public Offerings (IPOs) by 21 companies during the period 2003-2005.

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