Officials of the Enforcement Directorate arrested Comandur Parthasarathy, CMD of Karvy Group and G Krishna Hari, CFO of Karvy Group under Prevention of Money Laundering Act (PMLA), 2002.
The case pertains to alleged money laundering connected with illegal diversion of clients’ securities worth ₹ 2,873.82 crore by Karvy Stock Broking Ltd and pledging these securities with banks and NBFCs for seeking loans and subsequent loan default.
The ED said that investigation began after HDFC Bank filed a complaint at the Central Crime Station. More complaints were filed by other banks later, they added.
“The ED has uncovered a complex web of transactions designed by senior management of the Karvy Group to misuse the securities of their clients and to raise loans fraudulently, which were then rotated via multiple related companies and diverted away from the stated purpose. The shares of clients who did not owe any funds to KSBL were also transferred to the margin/ pool Account of KSBL and were pledged with the banks/ NBFCs. The Power Of Attorney (POA) given by clients to KSBL to facilitate exchange settlements was grossly misused by KSBL at the directions of the CMD and senior executives,” the ED said, adding that Mr Parathasarthy and Mr Krishna were the main conspirators who gave instructions to others.
The ED said that the duo were in Central Jail in Bengaluru and were produced before the PMLA Special Court MSJ in Hyderabad January 20. The court has remanded the CMD and CFO of the Karvy Group for four days of ED custody from January 27.
