IPO scam: Sebi gives relief to Karvy group

In A major relief to the Karvy group, the Securities and Exchange Board of India (Sebi) in its post decisional order in the IPO demat scam, allowed currrent demat account holders to continue with Karvy Depository Participant (DP) but restrained Karvy DP from acting as DP till final order is passed in the matter. Sebi also restrained the broking arm of the Karvy group from undertaking any proprietory trades in securities including off-market trades pending the enquiry. Sebi also withdrew interim directions against two broking entities namely; Jhaveri Securities Private Limited (JSPL) and Magnum Equity Services Limited (MESL) which were issued in its April 27, 2006 order. All Sebi directions come into force with immediate effect. While reacting to the Sebi order J.Ramaswamy, VP, corporate affairs, Karvy group said, ‘‘The Sebi order issued on Friday is a breather to the extent of DP business of the group and MF registry and Registrar and Transfer Agent (RTA) is not under the purview of the order. But still it is a continuing source of worry as the ban on opening new DP accounts continue. The ban will act as an hindrance in acquiring new customers when primary market is expected to be witness hectic activities with larger issues entering the market’’. The Sebi order also said Karvy Computershare Private Limited (KCPL) is directed not to act as a registrar to an issue and as a share transfer agent (STA), pending enquiry and passing of final orders, except for the assignments already contracted before passing of interim order dated April 27, 2006. This direction will not apply to KCPL as Registrar and Transfer Agent to mutual funds. G. Ananthraman, whole time member, Sebi in his order said, ‘‘except for acting on the instructions of existing beneficial owners, so that the interests of existing BOs remain unaffected. It shall transfer the demat account of an existing BO to another Sebi registered DP, on request’’. Sebi also appointed an enquiry officer who will conduct enquiry without being influenced by Sebi’s prima-facie findings and complete the enquiry expeditiously.