| "It has come as a total shock for all of us. This was not expected at all," Karvy group chairman, C Parthasarathy, said reacting to the Sebi's order on Friday morning. "We are still going through the Sebi order in detail and trying to understand its implications," he added. |
| KSBL accounts for Rs 250 crore of the Karvy group's total turnover of about Rs 400 crore. Karvy is also one of the India's largest stock brokers with 2.9 lakh customers. Over 35,000 individual customers trade with Karvy on a daily basis. |
| Referring to the Sebi's order pertaining to Karvy-DP, he said that whatever had happened was "not a representative sample of the total participants." Of the total 8 lakh accounts, about 65,000 accounts aggregating 8 per cent of the total accounts were of "suspicious nature and these have been closed," Parthasarathy said. |
| He said that fictitious accounts were opened by a handful of sub-brokers in two branches at Ahmedabad and Mumbai. Karvy has over 500 branches and over 15,000 primary market sub-brokers. The company had already taken action in this regard and suspended some of its employees in Ahmedabad. |
| "Absolutely not" was his reply to a question on whether he would accept that Karvy had failed to check the fraud. |
| "We have followed procedures. We acted on certificates of introduction issued by bankers. Now the banks claim that the certificates are forged. The Sebi's charge that they have been issued with the connivance of Karvy is baseless and simply based on the bank concerned along with the said individuals, who seemed to have acted in collision and are now shifting the blame," he said. |
| "It is also shocking for us that Sebi has barred Karvy Computershare Private from taking new assignments," Parthasarathy said. Karvy Computershare is India's largest registrar and transfer agent servicing 22 million investors. "We have unblemished record thus far," he pointed out. |
| J Ramaswamy, vice-president, corporate affairs of the Karvy group, stated that Sebi had not provided an opportunity to Karvy to clarify its role vis-a-vis the allegations made by "perpetrators and bankers". Had Karvy acted with a mala fide intent or benefited unduly, it should have received the benefit either by way of shares or funds by way of profit realised on these shares. "Karvy has not received any undue benefits whatsoever," he said. |
| Pointing out to the Sebi's order referring to KSBL as financier to one D B Mehta in the NTPC issue, Ramaswamy clarified that neither KSBL nor any of its associate companies financed the said investor for the issue. |
| Similarly, he said, Karvy had no mala fide intention in issuing single refund orders to various institutions that have funded initial public offerings. "We only wish that Sebi had given us an opportunity of being heard before passing such a harsh order," he added. |
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