SEBI Cancels Karvy Investor Services' Merchant Banker Registration
During inspection, it was discovered that the company was not operational at its registered or correspondence addresses.
The Securities and Exchange Board of India cancelled Karvy Investor Services Ltd.'s merchant banker registration on Thursday due to an eligibility breach.
Karvy Investor Services, registered with SEBI since Dec. 16, 2013, underwent an inspection by the market regulator from March 15–17, 2023. During the inspection, it was discovered that the company was not operational at its registered or correspondence addresses.
SEBI also found deficiencies in infrastructure and manpower, non-payment of renewal fees, and involvement in litigation by Karvy Investor Services' holding company, Karvy Stock Broking Ltd.
The regulator found that the entity lacked essential infrastructure such as office space, equipment, and skilled staff required to fulfil its duties as a merchant banker. It also failed to employ at least two experienced individuals to conduct merchant banking activities. The entity violated the eligibility criteria and conditions outlined in the Merchant Bankers Regulations.
Consequently, the SEBI-appointed Designated Authority recommended the cancellation of Karvy Investor Services' registration, which was duly supported by an Enquiry report. Following due process and in adherence to the principles of natural justice, SEBI cancelled Karvy Investor Services' registration as a merchant banker.
Despite being served with a show cause notice and given opportunities for a personal hearing, Karvy Investor Services failed to respond, leading to an ex-parte proceeding.