Securities depository wants probe into lapses in Yes Bank IPO allotment. | |
| The National Securities Depository Ltd (NSDL) today said that there have been lapses at Karvy in processing account opening applications, even though bank documents as required by Sebi norms were made available by Karvy Stock Broking in the matter of Yes Bank IPO allotment. |
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| NSDL feels that these have not been dealt with the care with which they ought to be treated. NSDL has asked Karvy to conduct an enquiry and take appropriate action in cases of both negligence as well as complicity. |
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| Sebi had asked NSDL to carry out an inspection of Karvy, particularly focusing on the Know Your Client (KYC) norms vide its order dated December 15, 2005, in the matter of Yes Bank IPO allotment. Subsequently, it had asked NSDL to submit its report by December 28 vide its e-mail dated December 26. |
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| NSDL conducted a special inspection to examine the various issues arising from the KYC norms and accordingly submitted its report to Sebi on December 28. Karvy has been advised to identify all those clients (with the addresses mentioned in Sebi order) in person. |
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| In case it is unable to identify the clients, Karvy has to freeze the accounts for all transactions till such time the clients identify themselves. It has been asked to take similar action in case of all accounts introduced by the same sub-broker. Till the task is not complete, Karvy should stop opening fresh demat accounts, NSDL said. |
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| Karvy has stated that it never carried out a check based on common addresses, which occur because it is a market practice to have company address in case of employees and financier's address in case of IPO financing. NSDL has suggested that Sebi may investigate whether these common addresses lead to the conclusion that there has been an abuse of the primary market process. |
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| In respect of accounts already opened with common addresses, NSDL has asked all its DPs to check the KYC documents with reference to those client accounts where more than 20 accounts have a common address, on December 17, 2005. |
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| Moreover, the NSDL inspection team, when it visits the DPs, will carry with it an analysis of the client accounts opened in the previous year where more than 20 accounts have the same address. |
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| ON THE LOOKOUT |
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| Sebi had asked NSDL to inspect Karvy, particularly focusing on the Know-Your-Client norms vide its order dated Dec 15, 2005, in Yes Bank IPO allotment NSDL has suggested that Sebi may investigate whether these common addresses conclude there has been an abuse of the primary market process Karvy has been advised to identify all those clients mentioned in the Sebi order |
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