ICAI finds Haribhakti & Co guilty of negligence – As Karvy auditor:

The accounting regulator is finally swinging into action in
the multiple demat account scam that was detected over three years ago.

The disciplinary committee of the Institute of Chartered
Accountants of India (ICAI) has found the internal auditors — Haribhakti & Co —
guilty of negligence, while checking the books of Karvy Depository Participant.

ICAI’s disciplinary committee has found one audit partner and
an audit manager of Haribhakti guilty.

But sources said of the three charges that were framed,
Haribhakti has been found guilty on only one charge.

Shailesh Haribhakti, a senior partner of the chartered
accountancy firm, refused to comment, saying “it would be premature”. The
central council of ICAI, which is the highest decision-making body of ICAI, will
now either ratify or overrule the report of the disciplinary committee. The
central council is likely to decide the fate of the two auditors next month. To
give a brief background of the case, the Securities and Exchange Board of India
had unearthed a multiple demat accounts scam in the year 2006.

A person named Roopalben Panchal opened thousands of demat
accounts and illegally cornered shares in various IPOs.

Sebi, in its April 2006 order, among others, faulted the
internal auditors of Karvy – Haribhakti, for failing to detect thousands of
demat accounts being opened with the same address.