HYDERABAD: Cyberabad police registered a case against Karvy Stock Broking Limited (KSBL) company and its promoters on charges of cheating ICICI Bank to the tune of Rs 563 crore. Initially a case was registered at Gachibowli police station under Sections 406 and 420 of the IPC on a complaint given by the ICICI bank manager, against KSBL and its promoters C Parthasarathy, Yugandhar and others for cheating and criminal breach of trust, said Cyberabad Police Commissioner VC Sajjanar in a release on Tuesday.
A few days back, Hyderabad police arrested Parthasarathy for cheating the IndusInd Bank in a similar manner. Cyberabad police may take him into custody on a transit warrant. KSBL was a member of the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange of India (MCX) and Metropolitan Stock Exchange of India (MSEI) and a depository participant registered with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
The funds raised by KSBL, by pledging shares, from its six bankers were transferred to KSBL’s own bank accounts, and not into ‘Stock Broker Client Account’, which is in contravention with the SEBI guidelines. Further, all pledges on securities were closed without approval of the concerned and securities were transferred to end clients of the KSBL, thereby severely impacting security of all lenders including ICICI Bank.
Police said, KSBL, with a dishonest and fraudulent intention of cheating, by planning criminal conspiracy, in collusion and connivance with other unknown unscrupulous persons, had misappropriated the financial assistance for their personal benefit, resorting to criminal breach of trust, wrongful loss to ICICI Bank and the fraud amount involved a total principal outstanding of Rs 563 crore.
The Securities and Exchange Board of India (SEBI) had in a circular issued in the past, directed that Clients’ securities lying with trading members and clearing members cannot be pledged to banks, NBFCs for raising funds. SEBI also specified that brokers should maintain clear segregation of the client beneficiary account and its own beneficiary account. The case has been transferred to the Economic Offences Wing of Cyberabad.