Giving relief to retail investors, market regulator Sebi on Friday said transactions carried out by barred market players on behalf of their clients will not be affected by the ban.
Updated at 5.35 pm
MUMBAI: Giving relief to retail investors, market regulator Sebi on Friday said transactions carried out by barred market players on behalf of their clients will not be affected by the ban.
The Securities and Exchange Board of India, which cracked down on market players including Karvy and India Bulls for their alleged involvement in an IPO scam, asked clients of the banned entities to switch over to other depository participants within 15 days.
The directions to the barred brokers not to buy, sell or deal in the securities market, including in IPOs, "would apply only in transactions in the proprietary accounts of brokers," Sebi said, adding that clients of these market players will not be affected by the ban.
The regulator also said that DP transaction of clients would remain unaffected only for 15 days, by which time clients of Karvy DP and Pratik DP should switch over to another DP.
Sebi had on Thursday barred 24 key operators from the stock market and banned 12 depository participants, including HDFC and IDBI, from opening fresh Demat accounts.
Probing the major scam involving public offers during 2003-05, including that of TCS, NTPC, Jet Airways, Yes Bank and IDFC, Sebi also asked RBI, stock market authorities, the Central Bureau of Investigations and Income Tax Department to pursue the issue.
In its 256-page interim order after going into abusive practices in 105 IPOs beginning with Maruti, Sebi said all those involved in the scams will be prosecuted.
HDFC Bank, IDBI Bank, Central Bank, ING Vysya Bank, IL&FS and Motilal Oswal have been asked by the market regulator not to open fresh Demat accounts.
The Karvy Group termed the ban as "very harsh" and said it would file its objections.
Quoting the Sebi order, in which Karvy Stock Broking figured as one among the 85 financiers involved in IPO scams, it said, "KSB has not financed any IPO customer till date. The Sebi order refers to KSB as financier to D B Mehta in the NTPC issue. Neither KSB, nor any of its associate companies financed the said investor for the said issue."
The investor has a secondary market trading account with KSB Mumbai branch and he had transferred shares into our pool account on the day the securities were listed and sold the shares in the market.
Sebi appears to have mistaken the transfer of securities in our pool account by a customer, who was subsequently paid the proceeds, as a wrongful act of Karvy, the group said.
Referring to the Sebi order that said a few of Karvy's sub-brokers were involved in opening fictitious accounts, it said, "Sebi has alluded in the report that the certificates of introduction issued by the bankers are forged and they have been issued with connivance of Karvy.
"This is baseless and simply based on the bank concerned along with the said individuals, who seemed to have acted in collusion and now shifting the blame."
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