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ED freezes Karvy shares held by its top honchos
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SME Times News Bureau | 25 Sep, 2021
In further action against Karvy Stock Broking Limited (KSBL), the
Enforcement Directorate (ED) has issued freezing order in respect of
shares of the group held directly & indirectly by the Chairman and
Managing Director of M/s KSBL, Comandur Parthasarathy, his sons, Rajat
Parthasarathy and Adhiraj Parthasarathy, and their entities in order to
safeguard the proceeds of the crime.
The development comes in the
wake of search operations on Wednesday at six locations connected to
M/s Karvy Stock Broking Limited (M/s KSBL) under PMLA 2002.
The
ED had conducted search operations on various premises of Karvy Group of
Companies, connected entities and at the residential premises of C.
Parathasarathy. During the course of search, several incriminating
evidences in the form of property documents, personal diaries,
electronic devices, email dumps, etc have been seized & are being
analyzed, ED officials stated on Saturday.
It is reliably learnt
that C. Parthasarathy is trying to off-load his shares in the group
companies through private deals and thus, in order to preserve the
proceeds of crime till further investigation, ED has issued a Freezing
Order dated 24/09/2021 under PMLA 2002, and the estimated value of these
shares has been arrived at Rs 700 crore as per the valuation for the
year 2019-20, the ED officials stated.
It may be noted that ED
had initiated money laundering investigation on the basis of FIRs
registered by Telangana Police on the complaint of HDFC Bank alleging
that M/s KSBL had illegally pledged the securities of its clients and
taken a loan of Rs 329 crore and diverted the same.
Another FIR
has been registered by Central Crime Station, Hyderabad Police, for
defrauding IndusInd Bank to the tune of Rs 137 crore and one more FIR
has been registered by the Cyberabad Police, Hyderabad, for defrauding
ICICI Bank to the tune of Rs 562.5 crore.
KSBL under the
leadership of C. Parthasarathy had committed gross irregularities and
all the illegally taken loans have become NPA. It is learnt that more
FIRs are being registered by other banks and also individual
shareholders/investors. The total loan proceeds taken from multiple
banks using the same modus operandi is around Rs 2,873 crore, a
statement issued by ED on Saturday said.
NSE and SEBI are also
investigating the affairs of KSBL. The ED is conducting investigation
under PMLA against Karvy Group of Companies for their involvement in the
offence of money laundering to the tune of Rs 2,873 crore.
During
the course of investigation, it came to light that KSBL did not report
the Depository Participatory DP account no 11458979, named KARVY STOCK
BROKING LTD (BSE) in the filings made from January, 2019 to August, 2019
with regulators/ exchanges.
Further, KSBL fraudulently
transferred shares belonging to its clients to its own demat account
(which is not disclosed to the exchanges) and pledged the shares held in
these accounts with the lenders/banks (HDFC bank, ICICI bank, IndusInd
bank, Axis Bank, etc). The securities lying in the aforesaid DP account
of KSBL, actually belonged to the clients who are the legitimate owners
of the pledged securities. Therefore, KSBL did not have any legal right
to create a pledge on these securities and generate funds. The quantum
of such loans taken by KSBL from illegal pledge of shares is to the tune
of Rs 2,873 crore. KSBL credited the funds raised by pledging of client
securities to 6 of its own bank accounts ("Stock Broker-own Account")
instead of the "Stock Broker-Client Account" and further has not
reported these 6 own bank accounts ("Stock Broker-own Account") held
with various private banks, to the SEBI. Prima facie, a net amount of Rs
1,096 crore was transferred by KSBL to its group company i.e. M/s Karvy
Realty (India) Ltd (KRIL), from 01-April 2016 to 19-October-2019.
Further,
KSBL did large scale trading activities in the name of 9 companies that
included M/s Karvy Consultants Limited (KCL), which is a group company
of Karvy, and 8 other shell companies, in the guise of doing insurance
business. During the course of investigation conducted under PMLA, it
also came to light that several crores of rupees were diverted for
acquiring immovable properties through the group company, KRIL, and to
other group companies as well.
It also came to light that
recently deletion of files and emails from the computer servers by
using anti-forensic tools had been done, under the instructions of C.
Parthasarathy. The bank statement analysis of these companies revealed
that there is large value rotation of funds between the Karvy Group of
Companies and the shell companies' bank accounts. Earlier, the ED had
recorded the statement of C. Parthasarathy in Chanchalguda Jail.
Further investigation is in progress.
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