New Delhi: Market regulator Sebi on Monday barred Karvy Stock Broking Ltd (KSBL) from taking up any new assignment for one year in respect of its role in the IPO scam of 2003-2005.
However, Sebi has allowed the entity to continue with primary market activities that have been undertaken before Monday's order.
It was alleged that the entity played an active role in aiding and abetting key operators in cornering of shares in IPO's of various firms.
In an order, Sebi directed "KSBL not to undertake new primary market assignment including acting as syndicate member or providing syndication services (procuring IPO applications and bidding in IPOs), directly or indirectly, in IPOs for a period of one year."
The ruling follows a Securities Appellate Tribunal (SAT) direction, issued in January this year, where Sebi was asked to pass a fresh order within four months. In March 2014, the regulator had barred KSBL from taking up new assignment for six months as a stock broker.
SAT's order came after it was found that the regulator did not permit the brokerage to cross-examine Bharat Overseas Bank's Ahmedabad branch manager Devi Dutt in the case.
These key operators were found to have cornered the shares issued in the IPOs by using these fictitious accounts.
On allotment of shares under retail category, the same were transferred to demat accounts of the key operators who subsequently transferred the shares in off-market deals to ultimate beneficiaries who were the financiers in the IPOs.
The probe had prima facie observed that the Karvy Group -- comprising of KSBL, Karvy Consultants Limited, Karvy Computershare Private Limited, Karvy Securities Ltd and Karvy Investor Services Limited -- had allegedly assisted, aided and abetted the key operators in cornering the shares issued in the IPOs.