KSBL and Parthasarathy were previously barred from the securities market for seven years in April 2023, and SEBI imposed a total penalty of Rs 21 crore on them. The fines were divided into Rs 13 crore for KSBL and Rs 8 crore for Parthasarathy, in response to the misuse of the Power of Attorney granted by their clients to raise funds unlawfully.
Despite these penalties, KSBL did not comply with SEBI's directives, leading to the current notice demanding Rs 15.21 crore from KSBL and Rs 9.36 crore from Parthasarathy, inclusive of interest and recovery costs. SEBI has mandated that these amounts be paid within 15 days to avoid further enforcement actions.
SEBI's investigation revealed that KSBL had mobilized significant assets by pledging client securities and raising funds from financial institutions, which were then diverted to related entities. This misuse of funds resulted in KSBL defaulting on its obligations to settle securities and funds with its clients.
To ensure compliance, SEBI has threatened severe measures including the attachment and sale of bank accounts and properties, as well as potential arrest and detention of Parthasarathy if the dues are not settled.
The regulatory body's actions reflect its commitment to maintaining integrity in the financial markets and protecting the interests of investors.