HYDERABAD: The Enforcement Directorate (ED) has issued an order freezing the shares of Karvy Stock Broking Limited (KSBL) valued at Rs 700 crore as per the valuation for the year 2019-20, following searches on the group's offices and that of the offices and residences of its promoters.
The ED is conducting an investigation on Karvy Group of Companies for its offence of money laundering to the tune of Rs 2,873 crore.
The ED has learnt that Karvy CMD C Parthasarathy is trying to offload his shares in the group companies through private deals to other sources. Thus, in order to preserve the proceeds of crime, it took the decision.
The ED had conducted searches on various premises of Karvy Group of Companies, connected entities and at the premises of C Parathasarathy, during which, incriminating evidence in the form of property documents, personal diaries, electronic devices, e-mail dumps were seized.
How it pledged client securities KSBL credited the funds raised by pledging of client securities to six of its own 'Stock Broker-own Account' instead of the 'Stock Broker-Client Account' and further has not reported these six own Stock Broker-own Accounts held with various private banks, to SEBI.
Prima facie, a net amount of Rs 1,096 crore was transferred by KSBL to its group company Karvy Realty (India) (KRIL), for the period starting from April 1, 2016 till October 19, 2019.
Investigations so far have revealed that KSBL did not report the Depository Participatory (DP) account, Karvy Stock Broking, in BSE in its filings from January 2019 to August 2019 with regulators and exchanges.
Further, 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 lender banks - HDFC Bank, ICICI Bank, IndusInd Bank and Axis Bank.
It also came to light that recently deletion of files and e-mails from the computer servers by using anti-forensic tools had been done, under the instructions of C Parthasarathy, who was arrested by the Hyderabad city police.
CMD TRIED TO OFFLOAD SHARES
CMD C Parthasarathy was trying to offload his shares in group companies, ED found following searches on his residence