COO and CFO of Karvy Stock Broking arrested

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Accused of defaulting bank loans, borrowing against securities from clients without their consent

Accused of defaulting bank loans, borrowing against securities from clients without their consent

Continuing its investigation into financial irregularities of Karvy Stock Broking Private Limited, Hyderabad Central Criminal Police arrested the company’s COO and CFO on Thursday.

COO Rajiv Ranjan Singh (52) and CFO G. Krishna Hari (63) were arrested at their respective residences in the city. Last month, police arrested the group’s chairman and chief executive, C Parthasarathy, for allegedly defaulting on bank loans, in addition to taking out loans against his clients’ securities without their consent. On complaint of Vice President of IndusInd Bank Hyderabad, a case was registered at CCS, against Karvy Stock Broking Pvt Ltd on the allegation of using credit facilities of ₹137 crore from the complaining bank in pledging securities/shares and personal guarantee of the chairman and MD Parthasarathi by removing the facts that the pledged securities belong to the clients without their consent and abusing the power of attorney.

The securities were transferred to the Demat account of Karvy stock Broking Pvt Ltd and pledged to the complaining bank for margin and short term requirement in KSBL business from March 1, 2013, said the co- police commissioner Avinash Mohanty.

The accused company became a defaulter by diverting the funds to its own and related business entities and on November 22, 2019, SEBI revoked the pledge of securities from the banks/NBFC and returned the securities/accounts. “The complaint bank was left without collateral and as a result, KSBL defaulted in repayment of approximately ₹137 crore as of March 31,” he said.

During the investigation, Mr. Parthasarathy was arrested and remanded in custody on 19 August. Further investigation revealed that KSBL CEO Mr. Rajiv Ranjan Singh, who is in charge of trading and brokerage, executed unauthorized trades. in nine other corporate trading accounts from 2014 to 2019.

CFO G. Krishna Hari misappropriated funds which were raised from banks by pledging client securities as collateral from nine shell companies as per oral instructions from their CMD for showing turnover and share huge market losses of KSBL in the stock market and caused a huge loss of ₹300 crore which was presented as book debts, Mr Mohanty said.

Several cases have been registered against the accused company and others at CCS Hyderabad.

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