Watch | Karvy Broking Scandal Explained: Unethical Pledging of Client Securities?

In this episode, Mitali Mukherjee speaks to Prakarsh Gagdani, the CEO of 5Paisa Capital on how Karvy Broking used its clients' shares to fund its real estate subsidiary and the fallouts it faced.

K.T Jagannathan, a senior business journalist, has written on The Wire on how "Karvy liberally used – rather misused – the power of attorney (PoA) obtained from its clients."

Jagannathan had written, "Karvy employed the PoA to transfer the shares of its clients to its related entities who thereafter pledged them with banks for raising fresh funds. The company allegedly had an unreported DP (depository participant) account to facilitate, rather hide, the misuse of client shares to satiate its thirst for funds. Rules make it mandatory for a depository to notify the exchanges of all its DP accounts. This unreported DP account was used as a conduit for its share pledge exercise."

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