Karvy Scam: ED Raids Six Places Across Hyderabad

Hyderabad: On Wednesday, officials from the Enforcement Directorate (ED) searched six locations in Hyderabad in connection with the Karvy stock brokerage fraud.

According to sources, searches were conducted at the home of Karvy Stock Broking Limited (KSBL) chairman and managing director C. Parthasarathy, who is now imprisoned, as well as Karvy's headquarters in Hyderabad.

Based on the FIRs issued by the Hyderabad central crime station, the agency filed a case under the Prevention of Money Laundering Act (CCS). "Searches were conducted at the offices and residential premises linked to KSBL, its CMD as well as other arrested people," sources added.

Officials had already recorded C. Parthasarathi's statement in the case. The ED is allegedly checking the destination and route of hundreds of crores of rupees in criminal gains from the fraud.

Karvy has been charged by the CCS police with defrauding IndusInd Bank, HDFC Bank, and many consumers. The accused is accused of concealing the fact that the pledged securities belonged to the clients and doing so without their agreement, in violation of their 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.

According to sources, the stocks were moved into Karvy's Demat account and pledged for margin and short-term obligations.

"The accused became a defaulter by diverting the funds into their own accounts and those connected to business entities," they added.

Likewise, HDFC Bank is said to have been defrauded of Rs 359 crore. The CCS also arrested two other people in connection with the investigation, in addition to Parthasarathi.