SAT upheld SEBI order; Dismisses broker Shankar Sharma's appeal
October 28, 2009
Upholding the Securities and Exchanges Board of India (SEBI) order to bar First Global Stock Broking Ltd's (FGSB) managing director Shankar Sharma from trading in equities market for a year, the Securities Appellate Tribunal (SAT) has dismissed his appeal against the SEBI order.
Earlier in February, SEBI barred Shankar Sharma from trading in securities market for one year for indulging in synchronised trades, buying and selling at the same time, to rig share prices of 10 companies in 2001. Following the SEBI order, Sharma appealed to the SAT, which stayed the debarment order in March.
The SAT, in its order on Wednesday, stayed the regulator's order until it heard the appeal, allowing Sharma to continue trading. It is scheduled to hold a separate hearing 3rd November to decide on the stay.
In the February order, SEBI's whole-time director MS Sahoo has said, “First Global Stock Broking manager and Vrudhi Confinvest India Pvt Ltd (VCIP) had indulged in large transactions in 10 securities (Global Telesystems, HFCL, DSQ Software, Zee Telefilms, Wipro, Satyam Computers, MTL, SBI, Infosys Technologies and Sterlite Opticals) in early 2001.”
“As these trades for Shankar Sharma in his proprietary account, as a client of Bang Equity on the one hand and the trades of VCIP which is 100% owned by Shankar Sharma and Devina Mehra, as a client of FGSB, resulted in large-scale synchronisation which resulted in creation of large artificial volume in those shares, I hold Shankar Sharma guilty for synchronising the trades in violation of regulation 4 (b) (c) and (d) of PFUTP Regulations, 1995,” Mr Sahoo said in his February order.
Upholding the SEBI order and after examining the alleged synchronised trades, SAT in its latest order said: "It is true that the Broker and Sub-broker are companies but when we lift the veil, it is the appellant and his wife who are lurking behind the curtain. It is thus clear that the appellant was on both sides. He was buyer as well as the seller."
"We have no hesitation to hold that these trades were fictitious as there was no change in the beneficial ownership of the shares traded and it was the appellant on both sides of the trade," the order said.
SAT said it heard at length Mr Somasekhar Sundaresan, the counsel for appellant. "He (Mr Sundaresan) laid great emphasis on the theory of 'witch hunting' against the appellant by the authorities that be for the appellant's association as a financier in the case of 'Tehelka expose' on certain defence deals. Impugned action of the Board, according to him, is one such manifestation of the revengeful action launched by the power that be. We are unable to agree with the learned counsel," SAT added.
Earlier, in 2001, Shankar Sharma had vociferously advanced the same 'witch hunt' theory when he filed appeal before SAT which was rejected by the Tribunal.
According to media reports, Mr Sundaresan said, "The application (on the stay order) will be heard next week. We only know that the appeal has not been allowed (by SAT)." - Yogesh Sapkale[email protected]