Bank loan

Karvy Stock Broking CEO and CFO Arrested for Embezzlement


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Hyderabad: In connection with the default of IndusInd bank, city police on Thursday arrested Rajiv Ranjan Singh, managing director and G. Krishna Hari financial director of the Karvy Stock Broking Limited (KSBL) scam for financial irregularities suspected, default on payments and borrowing against securities of clients without their consent.

The arrest was based on a complaint from IndusInd Bank, which alleged that KSBL had defaulted on repayment of around Rs 137 crore, according to the police press release.

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What events led to the arrest?

Earlier, C. Parthasarathy, president of Karvy, was arrested for non-payment of a loan of Rs 137 crore to IndusInd Bank, according to the PTI news agency. The ensuing investigation after Parthasarathy’s arrest revealed that CEO Rajiv Ranjan Singh, who is in charge of trading and brokerage, executed trades on the trading accounts of 9 other companies without authorization from 2014 to 2019. , Avinash Mohanty, co-commissioner, (detective department) Central Crime Station told the Indian Express.

The brokerage firm’s chief financial officer, G Krishna Hari, embezzled funds that had been raised from banks by pledging client securities as collateral to nine shell companies in accordance with Parthasarathy’s instructions, the report said.

This was done in order to reflect the huge turnover and market share of KSBL in the stock market and caused a huge loss of Rs 300 crore which was presented as book debts.

In November 2019, Sebi banned KSBL from acquiring new brokerage clients after observing that the brokerage had allegedly misused client securities to the tune of over Rs 2,000 crore. In November 2020, the Bombay Stock Exchange declared Karvy Stock Broking in default and pulled the brokerage house from its members after similar action was launched by the National Stock Exchange, in accordance with PTI.

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