InvestorQ : I have a trading account and demat account with Karvy Stock Broking and am not sure what to? Can you please help me out?
Dilmini Mercia made post

I have a trading account and demat account with Karvy Stock Broking and am not sure what to? Can you please help me out?

Dhwani Mehta answered.
2 years ago

You must be aware that the regulator, SEBI, has passed an ex-parte order against Karvy Stock Broking and has stopped them from taking up any fresh business. Karvy has been accused of misusing the power of attorney of its clients and transferring the shares and the pledged money to its own group company. It has also sold shares from client accounts without credits. The company has also delayed payments to client and is on the verge of a major default to the tune of Rs.2000 crore (as per reports). If you are an existing customer of Karvy, here is what you need to do.

· If you have a stock broking account, get a copy of the ledger and check it thoroughly to see that there are no inordinate debits in your ledger account.

· If there are any shares that you have purchased but you have not got the delivery, then insist on delivery immediately into your demat account. If you don’t get the delivery, you can file a complaint with NSDL or CDSL depending on the DP service that you are using. Also file a complaint with NSE.

· If you have sold shares and have not got the money, ask for the full cash balance in your trading account to be transferred to your bank account. If there is delay in getting the funds, you can file a complaint with the NSE immediately.

· Once your existing position is clear, make it a point to close your trading account and you can open a trading account with another broker. This is a step you must take as soon as your account on the funds and stocks front is fully clear.

· Once your trading account and demat account is opened with a new broker, you can give a DIS to Karvy to do an off market transfer of all your shares and other holdings to the new demat account. There is no cost attached to it and since it is your own account, it will not be treated as capital gains.

· In case you have given them a power of attorney for any activity, make it a point to cancel the power of attorney and get the letter acknowledged by the front office of Karvy for your records.

· Other relationships like registry are unlikely to be impacted by this order in a very significant manner.

The SEBI has given Karvy 21 days time to respond to the charges. I am not sure what will be the outcome but it is better to be safe than sorry.