Sebi urges Karvy investors to file claims before June 2 deadline approaches

Markets regulator Sebi on Friday asked investors of defaulted broker Karvy Stock Broking Ltd (KSBL) to file their claims, as the deadline of June 2 is approaching.

KSBL was declared a defaulter by the National Stock Exchange (NSE) on November 23, 2020. Following this, investors were invited to submit claims against the defaulting broker, with the final date for submission set as June 2, 2025.

Highlighting the urgency, Sebi, in its statement, said, "As the deadline for submitting investors' claims against default broker Karvy Stock Broking Ltd is approaching shortly, investors are advised to take note of the above deadline and are urged to file their claims before the deadline, if not lodged already."  For assistance, investors can reach out to NSE by calling its toll-free number 1800 266 0050 (select IVR option 5) or by emailing at defaultisc@nse.co.in, it added.

In April 2023, Sebi barred KSBL and its CMD C Parthasarathy from the securities market for seven years and also imposed a penalty of Rs 21 crore on them for misappropriating clients' funds by misusing the Power of Attorney given to the broking firm.

This action emanated from a massive asset mobilisation drive by KSBL, in which it raised huge funds from financial institutions. The broking firm did so by pledging clients' securities -- secured through the Power of Attorney granted to KSBL -- with promises of paying interest.

However, instead of fulfilling these commitments, the funds were misappropriated and diverted to entities connected with KSBL, ultimately leading to defaults in settling client securities and funds, in violation of regulatory norms.