InvestorQ : Why has the High Court dismissed a plea by Karvy and what is it about?
prachi Patwardhan made post

Why has the High Court dismissed a plea by Karvy and what is it about?

Answer
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sara Kunju answered.
3 weeks ago


In a late move on Thursday, the High Court of the state of Telangana in South India had dismissed a petition filed by Karvy. It may be recollected that Karvy filed a petition challenging the appropriateness of involving the SFIO.

The ROC had called upon the Serious Frauds Investigation Office or SFIO to investigating if there was any money laundering or slush trail in the Karvy scam of last year. Karvy had objected to the SFIO involvement when an investigation by SEBI was already on.

It may be recollected that in 2019, Karvy had been found guilty of pledging client shares with banks and lenders to raise funds for its corporate use. Post this action, the SEBI had suspended the trading terminals of Karvy across equity, F&O and commodities.

Apparently, Karvy had transferred shares belonging to its broking clients to its real estate subsidiary to make good the losses in that business. This had resulted in a slew of defaults before the actual scam broke out and the suspension was imposed by SEBI.

In its judgment, the High Court of Telangana has observed that the order for SFIO enquiry was passed keeping in mind the larger public implications of the action and Karvy had been given a chance to represent. Hence the High Court felt the ROC request was in order.