January 30, 2014
PR No. 009/2014
Order in the matter of irregularities in IPOs in respect of M/s. Karvy Stock Broking Limited,
Depository Participant
Shri Prashant Saran, Whole Time Member, SEBI, has passed an order dated January 28, 2014 in the matter of
irregularities in Initial Public Offerings (IPOs) in respect of M/s. Karvy Stock Broking Limited (referred to as Karvy
DP), a Depository Participant, prohibiting it from taking up any new assignment (i.e. not to take up any new clients)
for a period of Eighteen (18) months. However, it was also observed that Karvy DP has already undergone such
prohibition for 18 months and 26 days. In view of the above, there need not be any further penalty.
SEBI had conducted a preliminary examination, upon noticing certain irregularities with respect to IPO of different
companies. A few individuals/ entities (referred to as 'the key operators') had opened various demat accounts
(referred to as 'afferent accounts') in fictitious/ benami names and cornered/ acquired the shares of IPOs in the
category of retail investors using these accounts. Pursuant to the allotment, the shares were transferred to the
demat account of these key operators and from thereon to ultimate beneficiaries, who were the financiers in the
process. It was observed that the Karvy DP had opened various demat accounts in the fictitious/ benami names
and aided and abetted various key operators to corner the shares in the IPO.
Mumbai
January 30, 2014
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