Karvy Chief Filed in Rs 137 Crore Loan Fraud

HYDERABAD: The Central Crime Station (CCS) of Hyderabad city police investigating the multi-crore fraud by Karvy Stock Broking Limited (KSBL), have filed a chargesheet in court, framing charges against the accused.

The chargesheet names Karvy CMD C Parthasarathy and eight others including the top brass of the Karvy Group, who cheated IndusInd Bank to the tune of Rs 137 crore. Investigation into other cases against the group at CCS is going on.

KSBL is accused of fraudulently transferring shares belonging to its clients to its own demat account, which was not disclosed to the exchanges. It then pledged the shares held in these accounts with the lender banks — HDFC Bank, ICICI Bank, IndusInd Bank and Axis Bank. KSBL credited the funds raised by pledging of client securities to six of its own ‘Stock Broker-own Accounts’ instead of the ‘Stock Broker-Client Account’. It did not report these six Stock Broker-Own Accounts held with various private banks, to SEBI.

City police have so far arrested Karvy CMD C Parthasarathy, KSBL Vice-President and Risk Head, Srikrishna Gurazada, COO Rajiv Ranjan Singh, CFO G Krishna Hari, Company Secretary Y Sailaja and several other associates in connection with the case. Meanwhile, the Enforcement Directorate (ED), in September 2021, froze the shares of KSBL valued at Rs 700 crore as per the valuation for the year 2019-20. It initiated a probe on Karvy Group of Companies for its offence of money laundering to the tune of Rs 2,873 crore.

Firm transferred clients’ shares to its demat account

KSBL is accused of fraudulently transferring shares belonging to its clients to its own demat account, which was not disclosed to the exchanges. It then pledged the shares held in these accounts with the lender banks — HDFC Bank, ICICI Bank, IndusInd Bank and Axis Bank. KSBL credited the funds raised by pledging of client securities to six of its own ‘Stock Brokerown Accounts’ instead of the ‘Stock Broker- Client Account’

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