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The Enforcement Directorate (ED) froze shares worth Rs 700 crore, held by Karvy Stock Broking Limited (KSBL) CMD Comandur Parthasarathy and his family, after conducting raids at multiple sites, the agency said on Saturday.
“ED has conducted search operation at 6 locations of M/s Karvy Stock Broking Limited under PMLA, 2002 in a Bank Fraud Case. Subsequently freezed shares worth Rs.700 Crore of Karvy Group, held directly & indirectly by C Parthasarathy and his family,” the federal agency wrote on Twitter.
ED had carried out searches on September 22 at six locations in Hyderabad and on various premises of Karvy group of companies, connected entities and the residential premises of C Parthasarathy, according to an agency statement cited by PTI. The raids come against the backdrop of a money-laundering probe.
"Several incriminating evidences in the form of property documents, personal diaries, electronic devices, email dumps, etc have been seized and are being analysed," ED said, adding that C Parthasarathy is trying to off-load his shares in the group companies through private deals.
Also Read: CEO, CFO of scam-hit Karvy arrested in IndusInd Bank default case
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 said.
According to the agency, the shares frozen are held "directly and indirectly" by C Parthasarathy, his sons Rajat Parthasarathy and Adhiraj Parthasarathy, and their entities.
The ED has filed a case under the criminal provisions of the Prevention of Money Laundering Act (PMLA), based on a Telangana Police FIR that alleges KSBL had "illegally pledged the securities of its clients and taken a loan of Rs 329 crore and diverted the same."
However, there are two other FIRs against KSBL—registered by Hyderabad Police for defrauding IndusInd Bank to the tune of Rs 137 crore and registered by Cyberabad Police authorities for defrauding ICICI Bank to the tune of Rs 562.5 crore.
The ED has clubbed the three FIRs as part of its probe and has also recorded the statement of C Parthasarathy, who is currently lodged in the Chanchalguda jail of Hyderabad following his arrest by the Telangana Police in August.
According to ED, under the leadership of C Parthasarathy, KSBL indulged in "gross irregularities" and all the loans that the firm took illegally have become NPA. It is learnt that more FIRs are being registered by other banks and also individual shareholders/ investors, the agency said.
The total loan proceeds taken from multiple banks using the same modus operandi is around Rs 2,873 crore, it said, adding that the NSE and SEBI are also investigating the affairs of KSBL. The agency said its probe found that KSBL "did not report" the depository participatory or DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE), in the filings made from January-August, 2019 with regulators/exchanges.
The firm 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, including HDFC bank, ICICI bank, IndusInd bank, Axis Bank, etc, ED was quotes as saying.
—With text inputs from PTI