new Delhi: Under the Money Laundering Act, against Karvy Stock Broking Limited (KSBL) for fraudulently taking loans of Rs 28 hundred crore from banks by illegally pledging the shares of its customers and depositing that money in their accounts instead of customers’ accounts. Taking action, the Enforcement Directorate has temporarily attached movable and immovable properties worth Rs 1984 crore. This includes the movable and immovable properties of the Company and its Chairman and others. It is also alleged that speculative share trading was done with scam money which caused huge loss to the company.
A top official of the Enforcement Directorate said that the Directorate had started the investigation of the case on the basis of the FIR registered by the CCS Police Station of Hyderabad Police. In this case, based on complaints from lending banks and others, it was alleged that Karvy Group had taken loans of about Rs 2800 crore from banks by illegally pledging the shares of its customers. Later the account of loan given by banks turned into NPA. According to the Enforcement Directorate, KSBL was one of the leading stock brokers in the country with lakhs of clients.
Scam came to the fore in 2019
In the year 2019, this scam came to the fore during the investigation of the accounts of this company by NSE i.e. National Stock Exchange. It was also learned that the KSBL client had deposited the money raised by pledging the securities in his own 6 bank accounts (Stock Broker’s own account) while he should have deposited the same in the Stockbroker’s client account. Directorate raided 9 places in this case on 22 September 2021 and later CMD C Partha Sarathi and G Hari Krishna CFO of Karvy Group were brought on production warrant and produced before the special court of ED. Both of them were arrested on 20 January 2022 under the Money Laundering Act and at this time they are still in judicial custody.
Abuse of Power of Attorney given by clients
According to the directorate, during the investigation, CMD Partha Sarathi adopted a completely evasive and non-cooperative attitude and while admitting some wrongdoings done by KSBL, kept all the blame on its CEO, CFO and other senior officers. The ED came to know during the investigation of the case that the power of attorney given by its clients by KSBL was misused. The KSBL team had claimed that they had taken the approval of the customers either over the phone or verbally to pledge the shares of the customers, but even during the investigation, the people could not produce any such document.
During the investigation, it was also revealed that the scam money was transferred to other sister companies of the company. Also a large part of it was put in paper companies. Investigation revealed that this company did speculative share trading on a large scale and in that it had to face huge losses. At present, the Enforcement Directorate has attached movable and immovable assets worth Rs 1984 crore in this case. The inspection of the matter is going on.