New Delhi: Even as the Andhra Pradesh High Court brought some reprieve to Karvy stock broking and its clients, the finance ministry on Wednesday backed SEBI's action against the demat scam.
On Tuesday the Andhra Pradesh High Court had admitted Karvy's petition on the SEBI order and allowed opening of fresh demat accounts through Karvy.
It also suspended SEBI's interim order asking demat account holders to shift their accounts, saying that this ruling does not come under SEBI's jurisdiction.
SEBI has already put its action against broking house India Bulls in abeyance after a hearing with Indiabulls.
The Regulatory Authority is yet to give Karvy a hearing.
Earlier the finance ministry had made it clear that it will step in only if the market regulator SEBI and RBI failed to take action to prosecute those involved in multi-crore IPO scams.
The finance ministry has put the onus on SEBI to deal with the issue of prosecuting manipulative DPs involved in the scam.
Some top-level officials of the banks, which were blacklisted by SEBI are also suspected to be involved in the scam.
SEBI had barred 24 key operators from operating in the stock market and banned 12 depository participants from opening fresh accounts for their involvement in major IPO scams of Yes Bank and IDFC.
The market regulator, however, kept in abeyance a bar on India bulls, pending verification of its clients.
HDFC Bank, IDBI Bank, Central Bank, ING Vysya Bank,IL&FS and Motilal Oswal had been asked by the market regulator not to open fresh demat accounts.
In its order, Sebi had asked Karvy Securities to freeze the accounts for all transactions till the clients identify themselves. It has been also asked to take similar action in case of all accounts introduced by the same sub-broker.
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