Karvy Scam: What Lies Ahead For Investors?

Just over a month ago, in November, one of the oldest and reputed financial services company and stock broking firm that catered to lakhs of customers across the country was forced to cease operations almost immediately. The reason – it misused the Power of Attorney (PoA) given to it by the investors and transferred the shares from the investors’ account to another account and then pledged Rs2,300 crore worth of shares of over 95,000 clients as collateral to get loans from banks and NBFCs by pretending that the shares belonged to the company. Following the unravelling of the fraud, both Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE) suspended the trading license of Karvy while Sebi issued an order preventing the firm from adding new customers and barring it from exercising the PoA given by its customers. Investors are yet to recover from the shock and...