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NSE advises investors to keep their stocks safe

IamCheated.com Research Team | December 09, 2019  2:39:pm

NSE advises investors to keep their stocks safe

You must be aware of the Karvy Stock Broking scam which took place recently. Karvy Stock Broking is a stockbroker who had 12 Lakh clients with Demat and Trading accounts. Clients of Karvy could buy or sell stocks through them and the stocks were deposited in the Demat account. When the stock broking account is opened, the Power of Attorney is given to the broker; which allows them debit the Demat account and performs the transfer of shares.

Karvy misused the Power of Attorney to fraudulently pledge the shares of some of its clients. The funds raised were transferred to one of its sister firms, Karvy Realty Pvt Ltd. What Karvy has done is extremely unethical and illegal as it had misused the Power of Attorney for its own benefit. It is estimated that more than one lakh clients are affected by this fraud.

After this incident, the National Stock Exchange (NSE) issued an advisory to all investors on keeping their stocks and investments safe.

See Also: How to protect your stocks and mutual funds from stock brokers?

Here is the advisory issued by National Stock Exchange (NSE) to investors.

  • Ensure that pay-out of funds/securities is received in your account within one working day from the date of pay-out.
  • Be careful while executing the Power of Attorney (PoA) - Specify all the rights that the stockbroker can exercise and the timeframe for which PoA is valid. It may be noted that PoA is not a mandatory requirement as per SEBI / Exchanges.
  • Register for online applications viz. Speed-e and Easiest provided by Depositories for online delivery of securities as an alternative to PoA.
  • Ensure that you receive Contract Notes within 24 hours of your trades and Statement of Account at least once in a quarter from your Stockbroker
  • Please note that securities provided by you towards margin are not permitted to be pledged by your Stockbroker for raising funds.
  • If you have opted for a running account, please ensure that the stockbroker settles your account regularly and in any case not later than 90 days (or 30 days if you have opted for 30 days settlement).
  • Do not leave funds and securities idle with the stock broker.
  • Regularly login to your account, verify balances and verify the Demat statement received from depositories for correctness.
  • Check messages sent by Exchanges on a monthly basis regarding funds and securities balances reported by the trading member and immediately raise a concern if you notice a discrepancy.
  • Always keep your contact details viz. Mobile number / Email ID updated with the stockbroker. You may take up the matter with the Stockbroker or Stock Exchange, if you are not receiving the messages from the Exchange or Depositories regularly.
  • If you observe any discrepancies in your account or settlements, immediately take up the same with your stockbroker and if the Stock Broker does not respond, take it up with the Exchange or Depositories.

See Also: How your stock broker may cheat you?

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