The capital Markets regulator Securities Exchange Board of India (SEBI) slapped demand notice on Karvy Stock Broking Ltd (KSBL) and its CMD C Parthasarathy to pay Rs 25 crore within 15 days in a case pertaining to misappropriation of clients' funds by misusing the Power of Attorney.
The market regulator SEBI had last April barred KSBL and Parthasarathy from the securities market for seven years and imposed a penalty of Rs 21 crore for misappropriating clients' funds by misusing the Power of Attorney given to the broking firm.
The demand notice given on Wednesday notice was made after Karvy failed to pay the fine imposed on them by the market regulator and watchdog. SEBI had imposed penalties of of Rs 13 crore on KSBL and Rs 8 crore on promoter and CMD Parthasarathy last year.
The market regulator issued fresh notice to KSBL and Parthasarathy to pay Rs 15.21 crore and Rs 9.36 crore, respectively, including interest and recovery cost, within 15 days.
The market regulator in the notice warned defaulting brokerage of bank accounts attachments, sale of movable and immovable assets besides arrests of promoter and CMD Parthasarathy in the event of non-payment of dues for recovery of the penalties.
KSBL's had allegedly mobilised massive assets raising huge funds from financial institutions using the securities mobilised from the clients with a promise to pay them interest.
The funds were allegedly misappropriated and diverted to KSBL's connected entities and defaulting in its obligations to settle the securities and funds with the clients as per regulatory instructions.
