Mumbai: In a major order with regard to the IPO scam of 2003-2005, SEBI has barred Karvy Stock Broking Ltd (KSBL) from taking up any new assignment or launching new schemes for six months in respect of its role as a stock broker.
However, this order would not be given effect for a period of four weeks from the date of its receipt by KSBL, according to a direction of the Securities Appellate Tribunal (SAT).
In a case involving large-scale irregularities in 21 IPOs during 2003-2005, SEBI found that KSBL “failed to maintain high standards of integrity and further indulged in manipulation and malpractice and thereby violated the code of conduct” specified in its broker regulations.
The six-month prohibition order would also apply to the contract or launch of a new contract by KSBL, while it would also not be allowed to take new clients or customers during this period in respect of its stock brokerage business.
In his order dated March 14, SEBI's whole-time Member Prashant Saran said, “I note that while the enquiry officer has exonerated KSBL from the charge that it is not a fit and proper entity, the enquiry officer has recommended that the certificate of registration of the noticee as a stock broker be suspended for a period of three months.
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