SAT asks Sebi to look into Karvy’s plea on power of attorney issue

SAT asks Sebi to look into Karvy’s plea on power of attorney issue

Karvy had moved the SAT seeking relief to allow the firm to tender securities for settlement.

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MUMBAI: The Securities Appellate Tribunal (SAT) on Friday asked the Securities and Exchange Board of India (Sebi) to decide whether Karvy Stock Broking could be given interim relief for use of Power of Attorney (PoA). The tribunal has directed the capital markets regulator to pass an order on Monday.

Karvy Stock Broking had moved the SAT seeking relief to allow the firm to tender securities for settlement. Sebi had restrained the brokerage from using clients’ Power of Attorney because of which they are unable to finish the settlement process of the shares.

“The revocation of Power of Attorney is creating problems for Karvy in settling trades. Since clarification is sought, we deem it fit and proper that Sebi looks into the matter by giving Karvy an opportunity of hearing and passing final orders by Monday,” SAT said in an oral order.

Last week, Sebi banned Karvy Stock Broking for client defaults worth Rs 2,000 crore. It has been banned from taking on new clients and executing trades for existing customers.

This follows an investigation by the National Stock Exchange (NSE) which allegedly found that Karvy had sold client stocks pledged with it through associated entities and diverted the funds.

Sebi had directed depositories not to act upon any instruction given by Karvy Stock Broking in pursuance of Power of Attorney given to the brokerage house by its clients with immediate effect. It also asked depositories to not allow transfer of securities from depository participant account named Karvy Stock Broking with immediate effect.

Source- Economic Times.

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