Updated: September 3, 2021 10:10:33 am
The chief executive officer, Rajiv Ranjan Singh (52), and chief financial officer, G Krishna Hari (63), of Karvy Stock Broking Limited (KSBL) were arrested by Hyderabad police Thursday over alleged financial irregularities, including defaulting bank loans and raising loans against securities of clients without their consent.
KSBL’s chairman and managing director, C Parthasarathy (67), was earlier arrested on August 19 over allegations of diverting loan amounts obtained by pledging securities/shares of their clients without their consent by misusing the power of attorney.
According to a statement from Avinash Mohanty, joint commissioner, (detective department) Central Crime Station, investigation following the arrest of Parthasarathy revealed that CEO Rajiv Ranjan Singh, who is in-charge of trading and broking, had unauthorizedly executed trading in 9 other companies’ trading accounts from 2014 to 2019. KSBL’s CFO, G Krishna Hari, diverted funds which were raised from banks by pledging client securities as collateral to 9 shell companies as per the oral instructions of Parthasarathy for showing huge turnover and market share of KSBL in the stock market and caused huge loss of Rs 300 crore which was shown as book debts.
According to police, the securities of clients were transferred into the Demat account of KSBL and pledged before the complainant bank for margin and short-term requirements in the business of KSBL from March 1, 2013. KSBL became a defaulter by diverting the funds into its own and connected businesses entities and on November 22, 2019, the Securities Exchange Board of India (SEBI) revoked the pledge of securities with Banks/NBFCs and returned the securities/accounts, the statement added.
The complaint banks were left with no collateral and thereby KSBL defaulted in repayments of about Rs 137 crore as of March 31, 2021. Several criminal cases have been registered against the accused company and others.
The accused are charged under Sections 406(criminal breach of trust), 420(cheating and dishonestly inducing delivery of property), 409(criminal breach of trust by a public servant, banker, merchant, or agent), 421(dishonest or fraudulent removal or concealment of property to prevent distribution among creditors), 422(dishonest or fraudulent prevention of debt from being available to creditors), 120(B) (criminal conspiracy) of the Indian Penal Code based on a complaint from the vice-president of IndusInd Bank. The bank has alleged that KSBL defaulted in repayments of about Rs 137 crore.
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