The National Stock Exchange (NSE) has settled claims worth Rs2,300 crore of as many as 2.35 lakh investors of Karvy Stock Broking Ltd. NSE says claims of investors with a fund balance of up to Rs30,000 have been settled.
We learn that this is just one stage of the action against Karvy and more action will follow. Despite hundreds of complaints, Karvy has been given a lot of time to clear dues based on its request that it would sell assets and create liquidity. However, investors are losing patience and many of them, badly affected by the COVID-19 aftermath are also in need of funds.
In a statement, NSE says, "While disciplinary proceedings are underway, funds and securities of approximately Rs2,300 crore belonging to about 2,35,000 investors have been settled so far, with efforts focused on settlement of small investors. Investors with fund balances up to Rs30,000 due from Karvy Stock Broking have been settled."
Karvy Stock Broking was disabled (trading rights withdrawn) on 2 December 2019. NSE says, "In coordination with other market infrastructure institutions (MIIs) and under the guidance of Securities and Exchange Board of India (SEBI), it transferred securities to respective clients, invoked bank guarantees deposited with clearing corporations and liquidated securities held by Karvy group companies."
In November 2019, Karvy had unauthorisedly transferred securities worth Rs2,300 crore of more than 95,000 clients, into its account, by misusing the power of attorney (PoA) given by its clients.
On 22 November 2019, SEBI barred Karvy from taking new clients in respect of its stock broking activities and also prevented it from using the PoA given by clients after the broker was found to have allegedly misused clients' securities. Karvy had, instead of pledging its own shares, pledged shares belonging to clients and utilised them to raise funds. Some of these funds were, in turn, transferred to its sister concerns such as Karvy Realty Ltd.
Moneylife Foundation, through its trustee, Sucheta Dalal, had shared 136 complaints of investor with Karvy. Of these, over 100 investors have confirmed to us that they received their money or shares back from the brokerage – either in full, if it was below Rs20,000, or in part.
C Parthasarathy, chairman and managing director (CMD) the Karvy group, told Moneylife that NSE’s action is part of an ongoing process. He further said, "In most cases, may be in all cases, action has been initiated and we have effected payment as also credit of shares. In a few cases where action has not been initiated, we have also given reasons and have given the approximate timelines."
I am 70 years' old resident of Kerala, retired since 2010. I am already a registered member with Moneylife foundation with the email id [email protected]
I invested a significant part of my retirement corpus in the stock market using the services of Karvy Stock Broking. Lately, I am stuck with the Karvy imbroglio with a total of 6 lakhs under the hammer. It's my hard-earned money which was kept for the use of me and my 60 years' old spouse.Â
I had several communications with Karvy people, both over phone and email. All along, other than hollow assurances, I was left high and dry.
From an article which was released on hours ago by yourselves, I assume, all is not well with my investment and chances of getting it recouped from IPF is rather bleak. Till this minute, having been assured by anyone and everyone whom I discussed on this with, that my money would be safely returned, your article has come and hit me like a bolt from the blue. (https://www.moneylife.in/article/karvy-default-nse-settles-claims-worth-rs2300-crore-of-235-lakh-investors-more-expected/62114.html).Â
I am seeking your expert advice on how to proceed with this to resolve and get my money back. Please help and guide me. I shall ever be grateful for your assistance. I am not much of an IT freak. So going on online platforms are a bit of a concern.
Thanks and regards