Nuvama Wealth Management Ltd, the Indian wealth manager majority-owned by Asia-Pacific private equity firm PAG, said Monday it intends to challenge an order of the Securities Appellate Tribunal (SAT) in the Supreme Court.
The company, formerly Edelweiss Securities Ltd, said SAT on Friday dismissed an appeal by its wholly owned subsidiary Nuvama Clearing Services Ltd in a case related to handling client securities as a clearing agent.
Nuvama, which was renamed after it was acquired by PAG in 2021, said the SAT order dismissed the appeal, related to transactions during 2019-20, against the Member and Core Settlement Guarantee Fund Committee of NSE Clearing Ltd.
The case relates to a broker Anugrah Stock and Broking misusing client securities and Nuvama Clearing, as a professional clearing service provider, selling certain shares held as collateral after Anugrah failed to clear its dues.
The NSE Clearing committee had previously held that Nuvama Clearing failed to do due diligence while handling clients’ assets and to ensure that client’s securities were used only for meeting the respective clients’ obligations. The SAT upheld the NSE committee’s decision.
Nuvama, however, said it was disappointed with the SAT judgment and asserted that the actions taken by the firm were well within the governing regulations and risk management rules.
“Penalizing the Professional Clearing Member (PCM) for a broker’s misdeeds is, in our view, unjust and an unexpected development, potentially jeopardizing industry norms and impeding the functioning of PCMs,” Nuvama said.
Nuvama also said the original order mentioned selling of securities for an amount equivalent to around Rs 460 crore. Of this, Nuvama has already allocated collateral around Rs 236 crores to NSE Clearing.
“Our business maintains sufficient liquidity, ensuring that our operations and long-term goals remain unaffected,” the company said, adding that the SAT ruling has no material impact on Nuvama Wealth Management and its PCM business.
Separately, Edelweiss Financial Services Ltd said that, as part of the stake sale deal with PAG, it had indemnified Nuvama Clearing on this transacrion and that it will abide by this obligation.