SEBI v. Karvy Stock Broking Limited and others (client securities misuse, 2023)

Judgment entered

✓ Checked against the primary document on October 9, 2026. The library's summary, tags and figures for this record were compared with the regulator's own document by an AI model (Claude) following written instructions, in a single reading of the order; an independent second reading of 60 SEBI records agreed on every field for 56, the four misses being penalty amounts; a later sample of 50 of the SEBI records added on 9 October agreed on every field for 46. No lawyer has reviewed them. A checked record can still contain errors, and checked does not mean endorsed. See how we check records or report a correction.

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On 28 April 2023 a SEBI whole-time member found that the stockbroker Karvy had pledged clients' securities and moved the money to group companies, restrained the firm and its chairman for seven years, and imposed penalties totalling Rs 21.10 crore on four noticees.

The record

What was ordered

Civil penalty

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Disgorgement

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Prejudgment interest

—

Total relief

—

Alleged gain

—

Penalty as published

211m INR

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars. This regulator states penalties in INR. The figure is recorded as published and is not converted, so it does not appear in the USD totals or medians used elsewhere on this site.

What is alleged to have happened

A SEBI whole-time member, S. K. Mohanty, issued this final order on 28 April 2023. It concerns Karvy Stock Broking Limited, a stockbroker and depository participant on the NSE and BSE, its chairman and managing director Comandur Parthasarathy, other officers, and two group companies, Karvy Realty (India) Limited and Karvy Capital Limited. Nine noticees were named.

The case began with a limited NSE inspection in 2019. NSE reported that Karvy was raising money by pledging its clients' securities under powers of attorney and diverting the money to group entities, and had sold securities that were not in its depository account through nine related client accounts. SEBI issued an ex parte interim order on 22 November 2019, later confirmed, and the firm was expelled from NSE membership. The final order records that the firm's borrowing rose sharply during 2019, that around Rs 1,228 crore of the extra borrowing went to group companies, and that the two named group companies received the bulk of it.

Using a preponderance-of-probabilities standard, the order holds the charges substantially established against Karvy and Mr Parthasarathy, including breaches of Regulations 4(1) and 4(2)(m) of the PFUTP Regulations 2003, and finds the fraud charge also established against two officers, Bhagwan Das Narang and Jyothi Prasad. It finds another noticee negligent and treats the two group companies as the main beneficiaries. Proceedings against two noticees were closed on the strength of observations in the order.

The directions require the two group companies to return the transferred money to Karvy within three months, failing which NSE is to take control of their assets. Karvy and Mr Parthasarathy are restrained from the securities market for seven years, and Mr Parthasarathy is also barred from directorships and key managerial roles for ten years. Mr Narang and Ms Prasad are barred from such roles for two years, and one noticee is cautioned.

Penalties under the SEBI Act and Securities Contracts (Regulation) Act total Rs 13 crore on Karvy and Rs 8 crore on Mr Parthasarathy, including Rs 10 crore and Rs 5 crore respectively for the PFUTP breach, plus Rs 5 lakh each on Mr Narang and Ms Prasad. The library records the combined figure of Rs 21.10 crore.

The record does not show whether anyone appealed, how much of the clients' money and securities was eventually restored, or whether any criminal case followed. The conduct is broker misuse of client assets rather than market-price manipulation.

This library does not assign a technique tag to the matter, because no technique in the library fits the conduct. The tagging is ours, not the regulator's.

For the regulator's own account of the facts, read the primary document linked above. This page deliberately summarises the structured record rather than reproducing the order.

Timeline

1. 2023-04-28 SEBI whole-time member final order

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEBI order
• SEBI order (PDF)

The linked release is published by the issuing regulator under its own terms. Our summary and narrative above are our own writing.

Record added October 8, 2026. submit a correction.