Hyderabad: A complaint has been lodged against Karvy Stock Broking Ltd promoter C. Parthasarathy and others for allegedly cheating ICICI Bank to the tune of Rs 563 crore.
On Tuesday evening, the Police issued a press release stating, a case has been booked under Sections IPC section 406 (criminal breach of trust), 420, r/w 34 (cheating) of IPC against Karvy Stockbroking.
The leading brokerage had raised the funds by pledging shares of its six bankers. After then, the funds were allegedly moved to the firm’s personal bank account rather than the Stock Broker Client Account. According to the statement, this action has violated the Securities and Exchange Board of India’s (SEBI) standards.
“Securities and Exchange Board of India (SEBI) in its circular directed that clients’ securities lying with trading members or clearing members can’t be pledged to banks or NBFCs for raising funds. SEBI also specified that the broker should maintain clear segregation of client beneficiary account and its own beneficiary account. But funds raised by KSBL from six banks through pledging shares of clients were transferred to KSBL’s own bank accounts and not into the stockbroker client account, which is against SEBI guidelines,” Cyberabad police stated in a statement.
Also, all securities’ pledges were closed without permission, and securities were transferred to Karvy Stock Broking’s end clients. According to the press statement, this had a significant impact on the security of all lenders concerned, including ICICI Bank.
Following such developments, the case was transferred to the Economic Offences Wing of Cyberabad, where a special team will investigate the incident.
As per the PTI report, city police arrested Parthasarathy on August 19 on the charges of defaulting on a Rs 137 crore loan taken from IndusInd Bank.