Equity investment in India means more and more scrutiny about companies. But now after the Karvy broking scandal surfaced, it has become necessary for the investor to not only thoroughly investigate the companies, but also keep an eye on his broker. Along with all your concerns, now you should also worry that the broker may sell your shares and keep the proceeds. According to what has been revealed in the investigation by SEBI, Karvy Stock Holding has done the same with shares worth hundreds of crores of its customers. Shares were transferred from consumers' depository accounts, sold and the proceeds transferred to Karvy's real estate business.
According to what has been revealed in the investigation of SEBI so far, it is a case of mass robbery. It is a misdemeanour in India's equity market, and one of the biggest of its kind. But the most disturbing thing about this scandal is that those who carried out it had the right to do the wrong thing. When the real owners of the shares came to know that their shares had been sold, then all the bungling surfaced and it took a long time. Strange that every person associated with the industry as well as the regulator has accepted such a situation. It is impossible for you to open a demat account and invest in equity without signing the 'power of attorney'. For this you will have to give power of attorney to your broker.
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