SEBI Orders Karvy Stock And CMD C Parthasarathy To Pay Rs.25 Crore Fine
SEBI Orders Karvy Stock And CMD C Parthasarathy To Pay Rs.25 Crore Fine
The amount is to be paid within 15 days
The Securities and Exchange Board of India (SEBI) has sent a notice to Karvy Stock Broking Ltd (KSBL) and its chairman and managing director C Parthasarathy for failing to pay a fine imposed on them.
The markets regulator has ordered them to pay Rs.25 crore within 15 for misappropriating clients' funds by misusing the Power of Attorney (PoA).
In April 2023, SEBI barred KSBL and Parthasarathy from the securities market for seven years and imposed a penalty of Rs.21 crore. While KSBL was to pay Rs.13 crore, Parthasarathy was fined Rs.8 crore.
However, in the recent notice, SEBI directed KSBL and Parthasarathy to pay Rs.15.21 crore and Rs.9.36 crore, respectively, which includes interest and recovery costs.
In case of non-payment of dues, the markets regulator will recover the amount by attaching the bank accounts and attaching and selling the entities' moveable and immovable properties. Parthasarathy could face arrest and prison detention.
The matter relates to KSBL's massive asset mobilization drive followed by raising huge funds from financial institutions by using the securities from clients with a promise to pay them an interest.
The funds were misappropriated and diverted to KSBL's connected entities, thereby defaulting on its obligations to settle the securities and funds with the clients as per regulatory instructions.
SEBI had observed that KSBL was raising funds by pledging clients' securities and misusing the PoA granted to it by its clients. The company and its promoter were accused of violating the law.
