Days after Hyderabad Police arrested and remanded Chairman and Managing Director of Karvy Stock Broking Limited (KSBL), C Parthasarathy on charges of cheating and criminal conspiracy in a loan fraud case, police of Cyberabad on Tuesday filed a new case against KSBL for allegedly duping another bank out of Rs 563 crore. the The leader of the KSBL was arrested last Thursday.
Based on a complaint from the manager of ICICI bank, Gachibowli police have registered a case of fraud and criminal breach of trust against KSBL, Parthasarathy, Managing Director M Yugandhar and others. “The funds raised by KSBL by pledging the shares of its six bankers were transferred to KSBL’s own bank accounts, and not to the “stockbroker’s client account”, which is contrary to the guidelines of the Securities and Exchange Board of India (SEBI),” Cyberabad Police said.
According to a press release, all securities pledges have been closed without approval and the securities have been transferred to end customers of KSBL, thus seriously affecting the security of all lenders, including ICICI Bank.
Police said SEBI in its circular ordered that client securities belonging to trading members/clearing members cannot be pledged to banks/NBFCs to raise funds. SEBI also clarified that the broker should maintain a clear separation of the client’s beneficiary account and its own beneficiary account.
The investigation revealed that “KSBL, with the dishonest and fraudulent intent to cheat, planning a criminal association, in collusion/collusion with other unscrupulous unknown persons, if any, had misappropriated the financial assistance to their personal gain, thereby causing a criminal breach of trust, wrongful loss to ‘ICICI Bank’ with corresponding unjust gain to themselves, thereby committed the fraud with ‘ICICI Bank’ and the amount of the fraud involved a total outstanding of principal of 5.63 billion or Rs 563 crore.
The case is being investigated by a special task force that has been formed to investigate the case within the Economic Crimes Wing of the Cyberabad Police.
Earlier, Detective Department of Hyderabad Police Central Crime Station registered a case against M/s Karvy Stock Broking Pvt Ltd Hyderabad for defaulting on a loan of Rs 137 crore obtained from the branch of ‘IndusInd Bank in Hyderabad. The bank alleged that the credit was used by pledging securities/shares and a personal guarantee of Chairman and Managing Director Parthasarathi, suppressing the facts that the pledged securities belong to customers, and were used without their consent by misusing of the power of attorney.