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Misuse of client funds: NSE expels Modex International, Karvy Stock Broking and 28 others over the past 6 years

New Delhi, Up to 30 stockbrokers including Modex International Securities and Karvy Stock Broking, were expelled from the National Stock Exchange (NSE) for misusing client funds over the past six years. The exchange made these decisions between July 2017 and March 2022 as these brokers failed to comply with NSE guidelines, according to an update available to the exchange.

These stockbrokers have been declared in default for failure to comply with the exchange’s regulatory requirements. In addition, they were excluded from the membership of the exchange.

In addition, the exchange fined over 400 stockbrokers and issued more than 700 stockbrokers reprimands for non-compliance during the period.

Under NSE guidelines, stockbrokers must fulfill their duties, including not engaging in any wrongdoing or unprofessional conduct.

Apart from Modex International Securities and Karvy Stock Broking, NSE has excluded Anugrah Stock & Broking, Fairwealth Securities, Kaynet FinanceBMA Wealth Creators, Allied Financial Services, CM Goenka Stock Brokers and Omkam capital markets.

After conducting an inspection covering the period from March to December 2019, the exchange expelled Modex International Securities in September 2020 for misappropriation of client funds and securities, underfunding of net assets, non-payment of client accounts, falsification of books and other -solving investor complaints.

In addition, the capital market supervisory authority Sebi issued an injunction against Modex International Securities and its two directors in April 2020 for misappropriation of client funds and securities. In addition, a confirmation order was issued by the supervisory authority in this matter in September 2020.

In addition, a case against Modex International Securities is pending in the Delhi High Court.

In their lawsuit in court, 19 investors have claimed that the broker robbed their valuable lifetime savings of Rs 28.5 crore in addition to depriving them of their future earnings in the form of dividends/bonus/buyback among others.

These petitioners, mostly seniors, claimed that the total size of the fraud was much larger, around Rs 400 crore investors had cheated an estimated Rs 300 crore.

https://economictimes.indiatimes.com/markets/stocks/news/client-fund-misuse-nse-expels-modex-international-karvy-stock-broking-28-others-in-last-6-yrs/articleshow/90645191.cms Misuse of client funds: NSE expels Modex International, Karvy Stock Broking and 28 others over the past 6 years

Adam Bradshaw

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