Misusing client assets

Sebi must work with exchanges to reassure investors

The Securities and Exchange Board of India’s (Sebi’s) crackdown on the Karvy group has caused some apprehension within the stockbroking industry. Apart from barring Karvy from taking on more clients, the regulator has asked all brokerages to comply with its stringent rules for the separation of client accounts from the broker’s own accounts. This segregation is aimed at stopping the misuse of client assets. But a lot of brokers could be affected by this. An enforced rapid unwinding of affected positions could lead to big losses, leading to defaults. The Karvy group has been accused of diverting securities and funds