Hyderabad: ED attaches Rs 110 crore assets of Karvy stock broker firm – Times of India

HYDERABAD: Enforcement Directorate (ED) on Saturday provisionally attached assets of Rs 110 crore as part of the money laundering probe against Karvy Stock Broking Ltd (KSBL), firm chairman Comandur Parthasarathy and others. So far, ED has attached assets of Rs 2,095 crore under Prevention of Money Laundering Act (PMLA).
KSBL chairman C Parthasarathy and Group CFO G Hari Krishna, who were earlier arrested on money laundering charges, are currently out on bail.
In 2021, ED launched investigations after FIRs were lodged by central crime station police of Hyderabad on complaints by banks, which alleged Karvy Group had availed large amounts of loans by illegally pledging clients’ shares of Rs 2,800 crore. Subsequently, loans were diverted by top functionaries of the firm under C Parthasarathy’s supervision. Funds were ploughed into sister firms – KDMSL and KRIL – set up for real estate ventures and then routed via defunct non-banking financial companies to KFSL-NBFC to cover up bad debt.
Loans diverted into shell cos to tide over losses
A large chunk of loan proceeds was transferred into shell insurance companies, which indulged in speculative share trading with Karvy Stock Broking Ltd (KSBL) to tide over losses suffered by the brokerage firm.
The loans subsequently became non-performing assets (NPA) after the client’s securities were released as per orders of National Stock Exchange (NSE) and Securities Exchange Board of India (SEBI). “A very complex web of financial transactions, using shell entities and NBFCs were performed and proceeds invested in share capital, short-term advances and loans to group companies, resulting in enhancement of value of subsidiary companies of KSBL. Now, the accused are trying to sell these subsidiary businesses at profit to obtain indirect windfall gains to the main accused,” ED said.
The agency also stated Parthasarthy ensured financial benefits through group companies for his sons – Rajat Parthasarthy and Adhiraj Parthasarthy – in the form of salary, reimbursement of household expenses, projecting proceeds of crime as untainted money in hands of family members.
Further investigation revealed KDMSL managing director V Mahesh and a key managerial personnel of the Karvy group, is a close associate of Parthasarathy and he assisted and planned execution of money laundering operations. To safeguard proceeds of crime from alienation, ED attached 110.7 crore of assets and the total attachment in the case is pegged at 2,095 crore, officials said.