HYDERABAD: Officials of the Enforcement Directorate (ED) conducted searches at six locations in Hyderabad on Wednesday in connection with Karvy stock broking scam. Sources said searches were carried out at the residence of the incarcerated Karvy Stock Broking Limited (KSBL) chairman and managing director C. Parthasarathy and the offices of Karvy in Hyderabad.
The agency booked a case under the Prevention of Money Laundering Act based on the FIRs issued by the Hyderabad central crime station (CCS). "Searches were conducted at the offices and residential premises linked to KSBL, its CMD as well as other arrested people,” sources said.
Officials had earlier recorded the statement of C. Parthasarathi in the case. The ED is reportedly verifying the destination and route of crime proceeds amounting to hundreds of crores of rupees in the scam.
The CCS police registered four cases so far against Karvy for cheating IndusInd Bank, HDFC Bank and several clients. It is alleged that the accused suppressed the fact that the pledged securities belonged to the clients and was done without their consent, misusing power of attorney. “In one of the cases, IndusInd Bank accused Karvy management of availing credit facilities of Rs 137 crore by pledging securities. Parthasarathi suppressed that the pledged securities belonged to the clients without their consent and misused power of attorney. The securities of clients were transferred into the Demat account of Karvy company and pledged to IndusInd Bank. Karvy turned into a defaulter and also diverted the funds into its own and sister companies,” sources said.
The securities were transferred into the Demat account of Karvy and pledged for margin and short-term requirements said sources. "The accused became a defaulter by diverting the funds into their own accounts and those connected to business entities," they added. Similarly, HDFC Bank was also allegedly duped to the tune of Rs 359 crore. Two other people besides Parthasarathi were arrested by the CCS in connection with the case.
