Top Karvy Stock Broking officials arrested in money laundering case: The Tribune India

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Tribune press service

New Delhi, January 27

The Law Enforcement Branch said today that it has arrested Karvy Stock Broking Limited (KSBL) CMD C Parthasarathy and Group Finance Director G Krishna Hari under the criminal provisions of the Prevention of Broking Act Money Laundering (PMLA) in connection with its investigation into a securities scam worth over Rs 2,873 crore. .

The agency produced the two arrested defendants – already being held in Bengaluru Central Jail, after being arrested by state police – before a special PMLA court in Hyderabad on January 20 and on January 25 it brought them returned to four days of emergency custody from January 27. at 30, the agency said.

The ED case, filed under the criminal provisions of the PMLA, is based on several Telangana Police FIRs filed by HDFC Bank, with few other banks and investors alleging that client securities were illegally misappropriated by Karvy Stock Broking Ltd and these were then pledged to banks and the Non-Banking Financial Companies (NBFCs) for the loans, which were then ‘defaulted’.

The ED previously recorded statements from various employees of the Karvy Group and also investigated the case in September last year.

“The ED uncovered the intricate web of transactions engineered by Karvy Group’s senior management to misuse their clients’ securities and raise fraudulent loans which were then rerouted through several related companies and diverted from the stated purpose,” it said. said the agency. .

“Shares of clients who owed no funds to KSBL were also transferred to KSBL’s margin/pool account and pledged to banks/NBFCs,” he added.

The power of attorney (POA) given by customers to KSBL to facilitate exchange settlements was “grossly misused” by KSBL under the instructions of the CMD and senior executives, he said, while alleging that CMD Parthasarathy and Chief Financial Officer (CFO) Hari were the “main conspirators” giving instructions to others.

“Investigation of the trail of funds showed that the borrowed funds were transferred to other companies in the group, in particular to a wholly owned subsidiary of KSBL Karvy Realty (India) Limited (KRIL), and then to 14 companies fictitious schemes launched by Karvy Group,” he said, adding, “They were further misled by the layering done through a complex web of transactions from multiple group company accounts without any financial justification.”

Rs2,873-crore securities scam

  • The CMD and Group Finance Director of Karvy Stock Broking have been arrested by the Enforcement Branch under the criminal provisions of the PMLA in connection with its investigation into a securities scam worth over of Rs 2,873 crore.
  • The agency brought the two defendants to a special PMLA court in Hyderabad on Jan. 20 and on Jan. 25 it remanded them to four days in custody at the emergency room from Jan. 27-30.
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