Amid a few brokers coming under the regulatory lens for alleged lapses, brokerage firm Geojit on Wednesday said it is not under any probe by Sebi and that every off-market transaction undergoes concurrent audit by an external auditor.
Geojit's communication to its clients comes against the backdrop of Karvy Stock Broking Ltd (KSBL) facing regulatory action for alleged misuse of client funds.
"As you might know Sebi has taken action against a broking firm for the alleged pledging of its clients' shares to raise money for other businesses and this has led Sebi to investigate a few other brokers' as well for the misuse of clients' funds and securities. In this backdrop I would like to inform you that Geojit is not under any investigation by Sebi," Geojit Managing Director C J George said in the communication to clients.
He said that every off-market transaction of a client is first confirmed through a voice call/ e-mail and also undergoes concurrent audit by an independent external auditor before the transfer is executed. "This has been a standard practice for years even though it is not a regulatory requirement," he added.
At present, the brokerage has more than Rs 38,000 crore worth assets under custody and management.
"Over 95 per cent of Geojit's consolidated income comes from capital markets, including MF (Mutual Fund), and insurance distribution... Geojit does not indulge in any proprietary business in equity. In fact, the promoter and family members have no direct investments in the stock market, other than investments in MF and PMS (Portfolio Management Service)," George noted.
Regarding Power of Attorney (PoA) given by clients, he said it is used only for the purpose of transfer of securities towards a client's stock exchange-related margin/ delivery/ settlement obligations.
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"We do not use your PoA for any other purposes than these. We have always been a zero debt company and have never pledged our clients' securities for loan from any bank, even before it became a regulation as a matter of internal discipline," he added.
Sebi, on November 22, barred Karvy from taking new brokerage clients and also prevented it from using the PoAs after the brokerage was found to have allegedly misused clients' securities.
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