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May 26, 2006
PR No.
141/2006
IPO Investigations � Karvy Stock Broking Limited, Karvy Computershare Private Limited, Karvy Consultants Limited, Jhaveri Securities P Limited and Magnum Equity Services Ltd. Shri G. Anantharaman, Whole Time Member, SEBI has issued a post hearing order dated May 26, 2006 in the matter of IPO Investigations � Karvy Stock Broking Limited, Karvy Computershare Limited, Karvy Consultants Limited, Jhaveri Securities P Limited and Magnum Equity Services Ltd.
Pursuant to the ex-parte ad interim order passed by Whole Time Member, SEBI on April 27, 2006, an opportunity of personal hearing was given to Karvy Stock Broking Limited ("KSBL"), Karvy Computershare Private Limited ("KCPL") and Karvy Consultants Limited ("KCL") ("Karvy Group") on May 09, 2006 wherein oral and written submission were made by Karvy Group.
Jhaveri Securities P Limited and Magnum Equity Services Ltd. were granted an opportunity of personal hearing on May 04, 2006 wherein submissions were made by Jhaveri Securities P Limited and Magnum Equity Services Ltd.
After considering the submissions made by Karvy Group, following directions were issued in lieu of the directions issued earlier vide interim orders dated April 27, 2006 and April 28, 2006, as against the following entities:
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"KSBL is directed not to act as a depository participant, pending enquiry and passing of final orders, except for acting on the instructions of existing beneficial owners, so that the interests of existing BOs remain unaffected. It shall transfer the demat account of an existing BO to another SEBI registered DP, on request. It is clarified that KSBL shall continue to be governed by the SEBI (Depositories and Participants) Regulations, 1996 and other applicable legal provisions.
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KSBL, as a stock broker, is directed not to undertake any proprietary trades in securities, either off-market or on market, pending enquiry and passing of final orders.
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KCPL is directed not to act as a registrar to an issue and as a share transfer agent, pending enquiry and passing of final orders, except for the assignments already contracted before passing of interim order dated April 27, 2006. This direction will not apply to KCPL as Registrar and Transfer Agent to Mutual Funds. It is noted that Karvy Investor Services Ltd. and KCL are not registered as registrars to an issue or share transfer agents with SEBI".
After considering the submissions made by Jhaveri Securities P Limited ("JSPL"), following directions were issued:
"other directions against JSPL including that at para 17.9 of the order relating to opening of fresh demat accounts shall continue to be applicable till completion of enquiry proceedings and passing of final Order. However, considering the findings of BSE and NSE that JSPL (Broking entity) had merely acted as a broker on behalf of its retail clients and the shares received in its BO account were delivered by its clients towards their sale obligations, there is no need to continue interim directions against JSPL (Broking entity) as in para 17.2 of the ad interim order dated April 27, 2006".
After considering the submissions made by Magnum Equity Services Ltd. ("MESL"), following directions were issued:
"that they had acted only as a broker for Dushyant N Dalal for transaction in the shares of Shoppers Stop and not as a financier and therefore, there is no need to continue interim directions against MESL as in the ad interim order dated April 27, 2006".
Mumbai
May 26, 2006
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