Karvy case: SAT asks Sebi to review limited use of power of attorney issue

The Securities Appellate Tribunal (SAT) on Friday asked market regulator Sebi to look into the issue of clarification sought by Karvy Stock Broking with regard to usage of power of attorney given by clients.

Sebi, through an order passed on November 22, had barred Karvy from taking new clients in respect of its stock broking activities and also prevented it from using the power of attorney (PoA) given by clients after the broker was found to have allegedly misused clients' securities.

Pursuant to Sebi order, the brokerage house filed a plea with SAT, seeking certain clarifications with regard to restrictions imposed by the regulator as they were creating a problem in settling trades of its clients with the clearing house.

"Since a clarification has been sought by the appellant (Karvy) we deem it fit and proper that the WTM (whole time member of Sebi) should look into this aspect and pass appropriate order after giving an opportunity of hearing to the appellant," the tribunal said in an order.

It asked the Securities and Exchange Board of India (Sebi) to "pass an appropriate order after giving an opportunity of hearing by December 2, 2019".

Sebi's directive had come after the National Stock Exchange forwarded a preliminary report to it on the non-compliances observed with respect to pledging/misuse of client securities by Karvy.

The exchange's preliminary report is the result of the limited purpose inspection of Karvy conducted by it on August 19, covering a period from January 1 onwards, SEBI had said in its order.