The market regulator has attached Karvy Stock Broking's bank accounts, demat accounts and mutual fund folios held singly or jointly to recover dues worth Rs 15.34 crore.
In separate orders issued on the same day, on September 12, the Securities and Exchange Board of India (Sebi) has also attached the bank accounts and demat accounts of the stock brokerage's former promoter and managing director Comandur Parthasarathy to recover Rs 9.44 crore.
The orders were passed after the brokerage and its chief failed to pay the penalties imposed on them via an order issued by Sebi on April 28, 2023. Added to the penalties were interest on penalty and the cost of recovery.
The April 2023 order was passed after the regulator investigated the brokerage for misusing clients' securities and funds. The regulator found Karvy "recklessly deficient" in its role as a stock broker.
Sebi's Chairperson Madhabi Buch had made a reference to the fraud committed by the brokerage on its clients by saying that the regulator will not allow another Karvy-type incident in the capital markets.
In March 2023, while addressing the press after a meeting with Sebi's Board, she had said, "If another Karvy like instance happens, it will be on our dead bodies."
According to the latest orders from Sebi, both the stock brokerage and its former chief were issued notices of demand on August 7, 2024.
Since no amount has been paid by either of them, the regulator said that there was sufficient reason to believe that they may dispose off their securities/instruments in the demant account/accounts, or mutual fund folios, or funds held in the bank accounts. If that happened, the recovery of amount that was due from them would be delayed or obstructed.
Therefore, the regulator has attached their accounts.
Karvy Stock Broking had been been asked to pay a penalty of Rs 13 crore. Added to that is an interest from April 2023 to August 2024 at 1 percent per month of Rs 2.21 crore, interest as on September 2024 at one percent per month of Rs 13 lakh and a recovery cost of Rs 1,000. All of it adds to a total of Rs 15, 34,01,000 (Rs fifteen crore thirty-four lakh one thousand).
C Parthasarathy had been asked to be pay a penalty of Rs Rs 8 crore. Added to that is an interest from April 2023 to August 2024 at 1 percent per month of Rs 1.36 crore, interest as on September 2024 at 1 percent per month of Rs 8 lakh and recovery cost of Rs 1,000. All of this totals to Rs 9,44,01,000 (Rs nine crore forty-four lakh one thousand)
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
