Managing Director Rajiv Ranjan Singh (52) and CFO G Krishna Hari (63) of Karvy Stock Broking Limited (KSBL) were arrested Thursday by Hyderabad Police for alleged financial irregularities, including defaults on bank loans and the lifting of loans. against the securities of clients without their consent.
Chairman and CEO of KSBL, C Parthasarathy (67), had previously been arrested on August 19 on allegations of embezzlement of loan amounts obtained by pledging securities / shares of their clients without their consent by misusing the power of attorney.
According to a statement by Avinash Mohanty, Co-Commissioner, (Detective) Central Crime Station, the investigation following Parthasarathy’s arrest revealed that CEO Rajiv Ranjan Singh, who is in charge of trade and brokerage, executed transactions in 9 other companies without authorization. ‘trading accounts from 2014 to 2019. KSBL CFO G Krishna Hari embezzled funds that were raised from banks by pledging client securities as collateral to 9 shell companies in accordance with Parthasarathy’s oral instructions for showing KSBL’s huge turnover and market share in the stock market and caused a huge loss of Rs 300 crore which was presented as book debts.
According to the police, clients’ securities were transferred to KSBL’s Demat account and pledged to the complaining bank for margin and short-term needs in KSBL’s business from March 1, 2013. KSBL became defaulting by diverting funds to its own and related business entities and, on November 22, 2019, the Securities Exchange Board of India (SEBI) revoked the pledge of securities with the banks / NBFC and returned the securities / accounts, the statement added. .
The Complain Banks were left without collateral and as a result KSBL defaulted on repayment of around Rs 137 crore as of March 31, 2021. Several criminal cases have been filed against the accused company and others.
The accused are charged under Sections 406 (criminal breach of trust), 420 (deception and dishonest inducement to deliver goods), 409 (criminal breach of trust by an official, banker, merchant or agent), 421 (dishonest or fraudulent removal or concealment of property to prevent distribution among creditors), 422 (dishonest or fraudulent prevention of creditors’ debt), 120 (B) (criminal conspiracy) of the Indian Penal Code on the basis of a complaint from the vice-president of IndusInd Banque. The bank alleged that KSBL had defaulted in repayments of around Rs 137 crore.