How Edelweiss played a part in the Anugrah stock scam

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Editor's note: T. Ravi Kumar still can’t get over the shock of that day, back in August 2020, when he checked his demat account with Anugrah Stock and Broking. The shares in his account had vanished. The Hyderabad resident then tried reaching out to Paresh Kariya, founder and director of the firm, but got no response.  Finally, on 9 February this year, after trying and failing to get answers from various agencies, he proceeded to file an FIR with the Hyderabad Police, claiming to have been cheated of Rs 1.87 crore. The police have now launched an investigation in the matter.  Kumar wasn’t the only victim of the fraud, a virtual replay of the one perpetrated earlier by Karvy Stock Broking Ltd, in which the brokerage was found to have misused the funds and shares of investors lying in demat accounts, without their permission, to raise funds from financial institutions.  There was, however, a major difference. Anugrah did not act alone. It used the services of Edelweiss Custodial Services Ltd. This is because, unlike Karvy, which was a clearing member—i.e., authorized to …