Capital markets regulator SEBI has barred Karvy Stock Broking from taking up new IPO assignments, including acting as syndicate member or providing syndication services (procuring IPO applications and bidding in IPOs), for one year in a case related to the IPO scam of 2003-05.

This would, however, not include those IPOs for which Karvy has already been engaged to undertake primary market activities before the date of this order, SEBI clarified.

It was alleged that Karvy had played a key role in aiding and abetting key operators in cornering of shares in the initial public offerings of various firms during that period. Viewing the matter related to IPO irregularities in a holistic manner, SEBI said the Karvy Group is closely knitted rather than truly independent entities.

The business of one entity influences the business of other entities, both in a positive and negative sense.

SEBI considered Karvy’s argument that the business of the stock broking entity was adversely affected as the DP entity underwent an 18-month ban on acquisition of new business, as clients normally like to have both broking and demat accounts under the same roof.

SEBI further noted that the ban on the DP entity was likely to have affected the business of Karvy in addition to the adverse effects of the 14-month restriction on proprietary business.

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