The Enforcement Directorate has frozen shares worth ₹700 crore held by Karvy Stock Broking Limited CMD C Parthasarathy, his sons and their entities, as part of a money laundering investigation against them.
The ED action comes in the wake of search operations on Wednesday at six locations connected to Karvy group. During the course of search, incriminating evidence in the form of property documents, personal diaries, electronic devices, email dumps, etc have been seized & are being analysed, ED officials stated on Saturday.
It is reliably learnt that CMD C. Parthasarathy is trying to off-load his shares in the group companies through private deals; to preserve the proceeds of crime till further investigation, the ED has issued the freezing order.
ED had initiated the money laundering investigation on the basis of FIRs registered by Telangana Police on a complaint of the HDFC Bank alleging that KSBL had illegally pledged the securities of its clients and taken a loan of Rs 329 crores and diverted the same.
Another FIR has been registered for defrauding IndusInd Bank to the tune of Rs 137 crore and yet another for defrauding ICICI Bank to the tune of Rs 562.5 crore. It is learnt that more FIRs are being registered by other banks and also individual shareholders/investors. The total loan proceeds taken from multiple banks using the same modus operandi is around Rs 2,873 crore, a statement issued by ED on Saturday said.
KSBL fraudulently transferred shares belonging to its clients to its own demat account (which is not disclosed to the exchanges) and pledged the shares held in these accounts with the lenders/banks (HDFC bank, ICICI bank, IndusInd bank, Axis Bank, etc). The securities lying in the aforesaid DP account of KSBL, actually belonged to the clients who are the legitimate owners of the pledged securities. Therefore, KSBL did not have any legal right to create a pledge on these securities and generate funds.
(To receive our E-paper on whatsapp daily, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)