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Has Your Brokerage Firm Been Banned For Alleged Fraud: This Is What You Should Do


On Friday after violations by the stock broking firm Karvy Stock Broking came to fore, the market regulator banned the company from taking any fresh clients or executing existing trades of the clients. The firm has been alleged of diverting clients' stock holding into its own sister concern by pledging such shares in the open market and thereafter executing the transfer.

Has Your Broker Been Banned For Alleged Fraud: This Is The Recourse

So in case you have the demat account with the broking outfit. Here is what you as a trader with the firm should do. Notably, the SEBI has freezed all the power of attorneys given by the brokers clients to further prevent misuse and fraud:

1. Cross check your recent demat account in terms of securities and quantities held: Do make sure that there has not been any alteration made to your demat account at first. You can verify the same by getting the latest statement through any of the depositories; the same can be cross checked with the previous statements you might have received.

2. If there exist some discrepancy in respect of the quantity of shares you held previously i.e. there is some mismatch in what is being reflected from your current statement. Then you have to complaint with the SEBI, your broking company as well as with either of the depositories i.e. CDSL and NSDL.

3. To prevent such Karvy Stock Broking like events, investor need to be extremely vigilant and need to track their transactions regularly.

4. Now if things seem settled in your Karvy Demat account, you need to hunt for a new DP account and it is better to stick to renowned firms or banking arms. Now you need to submit the DP closure form with Karvy, your existing client and effect the transfer of securities in case securities are there. And since here you are transferring all your stock holding into a new demat account, there shall be no tax implication.


5. Also, check for any incomplete trades as say for example you bought into any of the securities and if they are still not credited to your demat holding, report and complaint it with the stock exchanges.

6. For you as an investor and trader in stocks, not only the valuation of your holding should matter but quantity of scrips should be equally important. As any careless, may lead to Karvy like instances, where we can we left in a lurch, working day and night to get out our funds and securities from such defaulting entities.

To prevent such happenings, the SEBI earlier in June 20 issued a circular which is to come into effect from October 1. Accordingly, brokerages have to settle the accounts of clients on a quarterly basis, failing which clients can complain to the regulator, but some of the brokers have still not implemented the ruling in its true sense.

Read more about: broker stock broker nse bse sebi
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