The Enforcement Directorate (ED) on Saturday mentioned it has frozen shares value Rs 700 crore after raids towards Karvy Stock Broking Limited (KSBL) CMD C Parthasarathy and others as a part of a money laundering investigation towards them.
He is at the moment lodged within the Chanchalguda jail of Hyderabad after being arrested by the Telangana Police final month.
The ED searches had been carried out on September 22 at six places in Hyderabad and on varied premises of Karvy group of firms, related entities and the residential premises of C Parthasarathy, the company mentioned in a press release.
“Several incriminating evidences in the form of property documents, personal diaries, electronic devices, email dumps, etc have been seized and are being analysed,” it mentioned.
“It is reliably learnt that C Parthasarathy is trying to off-load his shares in the group companies through private deals and thus, in order to preserve the proceeds of crime till further investigation, ED has issued a freezing order on September 24 and the estimated value of these shares has been arrived at Rs 700 crore as per the valuation for the year 2019-20,” it mentioned.
These shares of the Karvy group are being held “directly and indirectly” by CMD Comandur Parthasarathy, his sons Rajat Parthasarathy and Adhiraj Parthasarathy, and their entities.
The ED case, filed underneath the legal provisions of the Prevention of Money Laundering Act (PMLA), is predicated on a Telangana Police FIR alleging KSBL had “illegally pledged the securities of its clients and taken a loan of Rs 329 crore and diverted the same.”
“Another FIR has been registered by central crime station of Hyderabad Police for defrauding IndusInd Bank to the tune of Rs 137 crore and one more FIR has been registered by Cyberabad Police authorities for defrauding ICICI Bank to the tune of Rs 562.5 crore,” it mentioned.
The ED has clubbed all these FIRs as a part of its probe and has additionally recorded the assertion of C Parthasarathy in jail.
KSBL underneath the management of C Parthasarathy had dedicated “gross irregularities” and all of the illegally taken loans have turn into NPA, the company mentioned.
It is learnt that extra FIRs are being registered by different banks and likewise particular person shareholders/ traders, the ED mentioned.
The whole mortgage proceeds taken from a number of banks utilizing the identical modus operandi is round Rs 2,873 crore, it mentioned, including that the NSE and SEBI are additionally investigating the affairs of KSBL.
The company mentioned its probe discovered that KSBL “did not report” the depository participatory or DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE), within the filings produced from January-August, 2019 with regulators/exchanges.
“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 were/are the legitimate owners of the pledged securities,” the company mentioned.
It mentioned KSBL didn’t have any authorized proper to create a pledge on these securities and generate funds.
“The quantum of such loans taken by KSBL from illegal pledge of shares is to the tune of Rs 2,873 crore. KSBL credited the funds raised by pledging of client securities to 6 of its own bank accounts (stock broker-own account) instead of the “Stock Broker-Client Account” and further has not reported these 6 own bank accounts (stock broker-own account) held with various private banks to the Sebi,” it alleged.
Prima facie, the ED mentioned, a web quantity of Rs 1,096 crore was transferred by KSBL to its group company–Karvy Realty (India) Ltd– between April 1, 2016 to October 19, 2019.
It accused KSBL of conducting “large-scale trading activities in the names of 9 companies that included Karvy Consultants Limited (KCL), which is a group company of Karvy, and 8 other shell companies, in the guise of doing insurance business.”
“Several crore of rupees were diverted for acquiring immovable properties through the group company, KRIL, and to other group companies as well.”
It additionally got here to gentle that not too long ago deletion of information and emails from the computer servers by utilizing anti-forensic instruments had been completed, underneath the directions of C Parthasarathy,” it claimed.
The financial institution assertion evaluation of those firms revealed that there’s “large value rotation of funds” between the Karvy group firms and the financial institution accounts of sure shell firms.
Enforcement Directorate (ED) performed a search operation at 6 places of Karvy Stock Broking Limited underneath PMLA in reference to a financial institution fraud case. Shares value Rs 700 crores, held instantly & not directly by company chairman C Parthasarathy and his household, have been seized pic.twitter.com/Z1hIdoDNTY
— ANI (@ANI) September 25, 2021
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