karvy final

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?



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



CASE STUDY

IPO SCAMS HAPPENED IN THE YEAR

2005



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



Total applicants-2,48,828.

17.26% ficticious application

8.29% of retail investors cornered



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



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.



But this is not the end ««««««.of

multiple Demat scam...



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



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



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



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



Bogus Demat A/C Opened On 16 Aug. 2004

Ms. Roopalben Panchal 6315

Sugandh Estates and

Investments Pvt. Ltd.

1315

TOTAL 7630



WHO IS THE CULPRIT ???????????

ARVY

ULPRIT



KARVY ² THE CULPRIT

Facts

95% bogus benami account

Issue of single cheques

Transferring refund through electronicclearing system.



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



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



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



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.



GROUP MEMBERS

SACHIN AGARWAL 51

HARDIK JAIN 52

KINJA

L SHA

H 50SHRUTI PILLAI 53

RITESH CHANDAK 08

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