Sebi has ordered the attachment of bank and demat accounts of the three former officials of Karvy Group to recover Rs 1.80 crore for the misappropriation of client’s funds by Karvy Stock Broking Ltd (KSBL). The recovery against KSBL’s former VP (finance and accounts) Krishna Hari G; KSBL’s former compliance officer Srikrishna Gurazada; KSBL General Manager of administrative operations Srinivasa Raju for Rs 1.80 crore, includes interest, all costs, charges and expenses, Sebi said in three additional orders on Tuesday.
In its notices, Sebi asked all banks, depositories, and mutual funds not to allow any debit from the accounts of Krishna Hari G, Srikrishna Gurazada and Srinivasa Raju. However, credits were allowed.
Further, the market regulator directed all banks to attach all accounts, including lockers, of the defaulters.
Last month, Sebi sent demand notices to — Krishna Hari G, Srikrishna Gurazada and Srinivasa Raju — asking them to pay around Rs 1.8 crore in the case of misappropriation of client’s funds by Karvy Stock Broking.
In May this year, Sebi paid a fine of Rs 1 crore to Krishna Hari G, Rs 40 lakh to Raju, and Rs 30 lakh to Gurazada.
The case relates to KSBL’s huge fund raising by pledging the securities of customers and misusing the power of attorney (PoA) given to it by its customers. Further, the funds of KSBL were diverted to its group units, thereby violating various provisions of the law.
KSBL sold excess securities worth Rs 485 crore through nine related entities, which were also its clients, till May 2019.
Further, KSBL also transferred excess securities to six of these nine related entities.
Moreover, the total loan of KSBL, which obtained loans from financial institutions by pledging shares of its customers as collateral, was Rs 2,032.67 crore by September 2019 and the value of securities pledged by the stockbroker was Rs 2,700 crore during the period.