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SEBI: Stock broker KSBL challenges ex-parte ad-interim order of SEBI which had directed depositories not to act upon any instructions given by KSBL in pursuance of Power of Attorney given to KSBL by its clients
• An investigation by National Stock Exchange (NSE) allegedly found that stock broker/Karvy Stock Broking Ltd.(KSBL) had misused power of attorney given by its clients. KSBL had sold securities in market in disguised manner through own controlled entities and used funds for their own purposes.
• SEBI by way of an ex-parte ad-interim order in Karvy Stock Broking Ltd., In Re 112 Taxmann.com 2 had directed depositories not to act upon any instruction given by KSBL in pursuance of Power of Attorney given to KSBL by its clients with immediate effect. It also asked depositories to not allow transfer of securities from depository participant account named Karvy Stock Broking Ltd. with immediate effect.
• On appeal, appellant KSBL submitted that direction which restrains it from not acting upon instructions given to it by its clients pursuant to power of attorney had resulted in appellants' inability to execute instructions given by its clients on basis of power of attorney. Since client of appellant are trading online they are also unable to transfer securities from clients demat account to pool account for purpose of clearing trades with clearing house. Considering aforesaid, necessary clarifications were sought from respondent.
• Since a clarification has been sought by appellant, it is deemed fit and proper that Whole Time Member should look into this aspect and pass appropriate order after giving an opportunity of hearing to the appellant.