karvy final
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8/7/2019 karvy final
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INTRODUCTION
What is demat account?
Can a person open more
then one demat account?
What happens when aperson holds multiple
demat account?
How does a scam take
place through multiple
demat account?
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FACTORS RESPONSIBLE FOR SCAMS
Multiple DP accounts opened to facilitate
investment in IPO
Identity disguised for the same name in different companies
Margin money provided by brokers through single cheque
Loans sanctioned to brokers violating guidelines
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CASE STUDY
IPO SCAMS HAPPENED IN THE YEAR
2005
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IPO OF IDFC
IPO of IDFC opened on July 15, 2005
and closed on July 22, 2005.
IDFC came out with an public issue of
40,30,00,000.
Shares got listed on the Stock
Exchanges on August 12, 2005
141,260,000 equity shares offered
to Small Individual Investors
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Total applicants-2,48,828.
17.26% ficticious application
8.29% of retail investors cornered
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Bogus Demat A/C of Panchals & Others in IDFC
Ms. RoopalbenPanchal
27064
Sugandh
Estates andInvestmentsPvt. Ltd.
10181
ShriPurshottam
GhanshyamBudhwani
4748
TOTAL 41993
Source: SEBI Order on IDFC Demat Scam
39,43,184
27,08,944
2,98,412
69,50,540
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MODUS OPERANDI
1)Open 4398 fictitious
account
2)Receive allotment of shares
3)Make off market
transfer
4)Make windfall gain-
difference between IPO
price and the listing price.
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But this is not the end ««««««.of
multiple Demat scam...
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SCAM ² YES BANK IPO
Issue opened on June 15, 2005 1.75 Crores Shares Reserved for Small Investors
Rupalben & Syndicate earned profit of Rs 1,37,67,8000
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Gimmick of Roopalben in Yes Bank IPO
6,315 Bogus-fictitious applications,Demat A/cs, Bank A/Cs in karvyDP
9,31,600 shares allotment to thesefictitious accounts
An allotment of 9,31,600
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Syndicate
of Panchal-
Invest
ors
Roopalben made off market transfers on 11.07.05 to thefollowing entities:
1. Seer Finlease P.Ltd. - 3,32,875 shares 2. Excell Multitech Ltd. - 1,61,180 shares
3. Devangi Dipakbhai Panchal - 2,20,000 shares
4. Zenet Software Ltd. - 92,855 shares
5. Tauras Infosys Ltd. - 80,590 shares
6. Rajan Vasudev Dapki - 44,100 shares
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Sugandh Investment ² Yes Bank
1315 Bogus applications
Allotment of 1,97,250 shares
Profit of Rs 32,26,492
Modus-operandi similar to Rupalben
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Bogus Demat A/C Opened On 16 Aug. 2004
Ms. Roopalben Panchal 6315
Sugandh Estates and
Investments Pvt. Ltd.
1315
TOTAL 7630
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WHO IS THE CULPRIT ???????????
ARVY
ULPRIT
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KARVY ² THE CULPRIT
Facts
95% bogus benami account
Issue of single cheques
Transferring refund through electronicclearing system.
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Roopal ben and others are asked not to trade in future.
NSDL and CDSL are asked to close their benami demat
-NSDL AND CDSL are adviced to enhance their surveillance.
karvy was banned.
banks involved in opening benami bank accounts were fiinedby RBI.
ACTIONS BY SEBI
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WHAT SEBI SHOULD DO?????????
Establish an international security systems
to validate the source of data.
Lay down an automated drill
Develop an objective method of utilising
tools and techniques to assess NSDL/ CDSLenterprise
Need for comprehensive operational
framework implementing important
aspects of KYC instructions
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WHAT SEBI SHOULD DO??
TO allow multiple fraud checks sebi should established Integrated
Market Surveillance System (IMSS).
IMSS - Australian system
Monitor s market activities.
Envisages integration of data available from stock exchanges
identify and detect serious violations such as market
manipulations, insider trading and other types of frauds
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How can investor safeguard himself?
Stay in touch with DP
Become cautious if you dont get the holding statement.
Keep tab on your DP
Ask for printed pre-instruction slips Consider freezing your demat account.
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GROUP MEMBERS
SACHIN AGARWAL 51
HARDIK JAIN 52
KINJA
L SHA
H 50SHRUTI PILLAI 53
RITESH CHANDAK 08
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