By Sandeep Shah The hornet’s nest has been stirred again! The news about a reputed stockbroking firm misusing power of attorneys (POA) given by clients in its favour to pledge the shares for its own benefit and the consequential losses suffered by the client due to the inability of the broker to return the shares has made the capital market jittery. The shock wave is not limited to such clients alone, but also to the lending community. Way back in 2010, Sebi had realised that diverse practices were prevalent in the area of obtaining power of attorneys from clients, which gave brokers and/or brokers-cum-depositary participants unfettered powers. During a study of such market practices, Sebi had observed that clients were compelled to issue irrevocable PoAs, which gave broker/s the right to open and close accounts and trade on client’s accounts without consent. In most cases, brokers were not even offering services unless clients gave PoAs. Dos and don’ts vis-a-vis your brokers to avoid Karvy-like mess of 11NextPrevPlay SlideshowA stitch in time, saves…7 Dec, 2019In the wake of the Karvy Broking crisis, investors have increasingly grown suspicious of their brokers and turned doubtful about the safety of their investment. In order… Read full this story
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