NEW DELHI: In a Rs 2,800crore share market fraud and money laundering case, the ED has arrested Karvy Group CMD Comandur Parthasarathy and its CFO G Krishna Hari under the Prevention of Money Laundering Act. The agency had earlier attached assets worth Rs 700 crore in the case.
The agency claimed that Karvy group had illegally diverted clients’ securities worth Rs 2,874 crore, pledging them with banks for loans and then laundering the proceeds. Parthasarathy and Hari are presently lodged in Bengaluru’s Central Jail after being arrested in the fraud case. They have been arrested again by the ED for custodial interrogation in the money laundering case. The ED probe was initiated on the basis of HDFC Bank’s FIR filed by the Hyderabad police.
The agency had carried out searches against the group’s entities in September last year and later recorded the statements of several of its employees. The agency said it has unearthed a “complex web of transactions designed by the senior management of the Karvy group to misuse the security- ties of their clients and to raise loans fraudulently”.
The funds generated through bank loans were rotated through multiple companies and diverted for other purposes. The shares were also transferred to the margin/pool account of Karvy Stock Broking Ltd (KSBL) and were pledged with banks.
“The power of attorney given by clients to Karvy Group to facilitate exchange settlements was grossly misused on the directions of the CMD and senior executives,” the ED claimed. It has named Parthasarathy and Hari as the main conspirators in the case. The accused illegally transferred borrowed funds to at least14 shell companies after transferring them to group company Karvy Realty (India) Ltd (KRIL, All the 14 shell companies were floated by Karvy Group and various financial consultants and defunct NBFCs were used to route the funds, the agency said.
“Further, it is found that Karvy Group availed loans from NBFCs to the tune of Rs 400 crore in the name of five such shell companies by pledging shares of clients after illegally transferring these shares to their account,” the ED claimed.
The agency claimed that Karvy group had illegally diverted clients’ securities worth Rs 2,874 crore, pledging them with banks for loans and then laundering the proceeds. Parthasarathy and Hari are presently lodged in Bengaluru’s Central Jail after being arrested in the fraud case. They have been arrested again by the ED for custodial interrogation in the money laundering case. The ED probe was initiated on the basis of HDFC Bank’s FIR filed by the Hyderabad police.
The agency had carried out searches against the group’s entities in September last year and later recorded the statements of several of its employees. The agency said it has unearthed a “complex web of transactions designed by the senior management of the Karvy group to misuse the security- ties of their clients and to raise loans fraudulently”.
The funds generated through bank loans were rotated through multiple companies and diverted for other purposes. The shares were also transferred to the margin/pool account of Karvy Stock Broking Ltd (KSBL) and were pledged with banks.
“The power of attorney given by clients to Karvy Group to facilitate exchange settlements was grossly misused on the directions of the CMD and senior executives,” the ED claimed. It has named Parthasarathy and Hari as the main conspirators in the case. The accused illegally transferred borrowed funds to at least14 shell companies after transferring them to group company Karvy Realty (India) Ltd (KRIL, All the 14 shell companies were floated by Karvy Group and various financial consultants and defunct NBFCs were used to route the funds, the agency said.
“Further, it is found that Karvy Group availed loans from NBFCs to the tune of Rs 400 crore in the name of five such shell companies by pledging shares of clients after illegally transferring these shares to their account,” the ED claimed.
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