SEBI Mandates Attachment Of Bank, Demat Accounts Of Karvy Group’s Former Officials To Recover Rs 1.80 Crore

Sebi, in it’s notices, urged all banks, depositories, and mutual funds to restrict any debit from the accounts of the three former executives, however, allowed credits from these accounts.

The Securities and Exchange Board of India (SEBI) directed the attachment of bank and demat accounts of three former officials of Karvy Group in order to recover Rs 1.80 crore related to the misappropriation of clients’ funds by Karvy Stock Broking Ltd (KSBL). 

The market regulator issued three attachment orders earlier in the week stating the recovery proceedings against KSBL’s former VP (finance and accounts) Krishna Hari, former compliance officer Srikrishna Gurazada, and general manager of back office operation Srinivasa Raju. These proceedings involved a recovery of Rs 1.80 crore, inclusive of interest, all costs, charges, and expenses, reported PTI. 

Sebi, in it’s notices, urged all banks, depositories, and mutual funds to restrict any debit from the accounts of the three former executives. At the same time, the regulator allowed credits from these accounts and asked all the banks to attach all accounts of the defaulters, including the lockers. 

Notably, Sebi issued demand notices last month to Krishna Hari G, Srikrishna Gurazada, and Srinivasa Raju, urging them to pay nearly Rs 1.8 crore regarding the misappropriation of clients’ funds by KSBL.

Earlier this year in May, the regulator imposed fines of Rs 1 crore on Krishna Hari, Rs 40 lakh on Raju, and Rs 30 lakh on Gurazada. The matter pertains to KSBL’s huge funds raising by pledging clients’ securities and inappropriately using the power of attorney (PoA) given to it by the clients.

Additionally, the funds by the firm were being diverted to the group entities leading to a breach of law. KSBL further sold surplus securities for nearly Rs 485 crore via nine related entities, which were also the firm’s clients, till May 2019. The total borrowing of the firm, which was collecting loans from financial institutions by committing clients’ shares as collateral, stood at Rs 2,032.67 crore, as of September 2019, and the evaluation of securities committed by the broker was Rs 2,700 crore during the period.