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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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    CASESTUDY

    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 ofshares

    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 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 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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    KARVYTHE 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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