BMA Wealth and Karvy Stock Broking are set to face more heat as the Securities and Exchange Board of India (SEBI) is planning to attach their assets for misusing clients' securities.
"Exchanges have temporarily suspended operations of both brokers. After the final order is issued, the market regulator may initiate the process of attaching the properties of the company and its promoters," a source told Moneycontrol.
SEBI mainly pursues attachment of properties in collective investment schemes where promoters fail to return the capital of small investors.
VR Narasimhan, Dean of the SEBI-promoted National Institute of Securities Markets (NISM), explained that in the current regulatory regime, the non-financial assets of a broker or firms controlled by the broker remain untouched.
"If assets, including dwelling units, of defaulting brokers are attached and sold to recover amounts payable to clients, then these type of events will not continue," he said.
In the case of Karvy, more than 90 percent of clients have received securities via SEBI's swift action. However, around 7,000 clients are in dispute with the company, so they may get their money/securities after clearing their dues.
Exchanges have issued a showcause notice to BMA Wealth Advisors asking why it should not be debarred from market, a source said, adding that a final order may be passed in the next couple of months. BMA Wealth is yet to repay more than Rs 100 crore to clients.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
