Securities and Exchange Board of India (Sebi) is estimating the misuse of client securities by Karvy Stock Broking at Rs 2,800 crore, reported livemint, citing two people with direct knowledge of the matter. The market regulator had earlier estimated the amount at Rs 2,000 crore.
Rafique Dada, the senior counsel appearing on behalf of the Securities and Exchange Board of India (Sebi) at the Securities Appellate Tribunal (SAT), had said on Friday that the misuse was much larger as per the initial findings of the forensic audit, the report said.
One of the sources told the paper that the amount may even increase further, however, the exact figure would be known only on the completion of the forensic analysis.
Sebi banned Karvy Stock Broking from taking new clients and executing trades for existing customers alleging misappropriation of money to fund its real estate arm, Karvy Realty.
According to the regulator, Karvy violated norms, including transferring client shares to itself, and pledging client shares to raise money, which is diverted to its real estate arm.
In an exclusive interview with CNBC-TV18, Karvy Group Chairman C Parthasarathy said all the branches and customers of the firm were able to trade freely and there was absolutely no issue as far as the clients are concerned.
Clarifying on the reports of default, Parthasarathy had said, “Delays (in pay-outs) have been small, there have been delays because the focus has been on analysing all these securities, the delays have been very small, it would be about Rs 20-30 crore as of now and we hope to clear this by the end of this week."
First Published: IST