SEBI has imposed a fine of Rs 3 crore on BSE and Rs 2 crore on National Stock Exchange (NSE).
The Securities and Exchange Board of India (SEBI) has imposed penalty on BSE and NSE for “negligence” in detecting misuse of securities worth Rs 2,300 crore by Karvy Stock Broking Limited (KSBL) of its clients. Issuing two separate orders in this regard, SEBI has imposed a fine of Rs 3 crore on BSE and Rs 2 crore on National Stock Exchange (NSE).
Let us tell you that this case pertains to misuse of securities worth Rs 2,300 crore by KSBL. KSBL had pledged these securities belonging to more than 95,000 customers through just one demat account. Simultaneously, KSBL used the money raised by pledging the securities for itself and for its group entities. KSBL had raised Rs 851.43 crore from eight banks/non-banking financial companies (NBFCs) through pledged securities.
According to the order issued by the exchanges on Tuesday, “There is no doubt that it was KSBL which in an unauthorized manner pledged the securities of the clients. In such a situation, she herself was responsible for the loss. He pledged securities which he did not own. This resulted in loss to the investors as well as the banks and NBFCs lending to KSBL.
SEBI said that KSBL being a member of BSE and NSE was under the regulatory oversight of the exchanges. Both the exchanges were ‘negligent’ in detecting the misuse of funds by KSBL. He has a responsibility for that.