Mumbai: The Securities Appellate Tribunal, or SAT, on Monday stayed a 14 February order of Securities and Exchange Board of India, or Sebi, that restrained Shankar Sharma, vice-chairman and joint managing director of First Global Stock Broking Ltd, from trading in equities for one year.
“SAT has stayed Sebi’s order on Shankar Sharma,” an official of the tribunal said. Its order was not available on markets regulator Sebi’s website till Monday evening.
Some relief: Shankar Sharma, First Global Stock Broking Ltd. Abhijit Bhatlekar / Mint
Sharma confirmed the development to Mint. “The order had anyway been stayed by the Bombay high court earlier. So the order never came into operation and SAT has recognized that, and further extended the stay,” he said, adding that Sebi’s order was “absurd and bad on law as well as fact.”
Sebi had in its 14 February order barred Sharma from trading in the stock markets for at least one year for violating norms during the 2001 stock market swindle using fictitious trading accounts. The incident later came to be known as the Ketan Parekh scam.
The markets regulator had said in its order that First Global and a Sebi-registered sub-broker, Vrudhi Confinvest India Pvt. Ltd, had made large transactions in 10 securities that Parekh had also used, such as Himachal Futuristic Communications Ltd, DSQ Software Ltd, Zee Telefilms Ltd, Mahanagar Telephone Nigam Ltd and Satyam Computer Services Ltd.
Sebi also alleged that Sharma had carried out a number of synchronized trades in his proprietary account in various securities, with Vrudhi Confinvest, which was 100% owned by him and Devina Mehra. However, Mehra, who was also a director of First Global, had been cleared of all charges in the 14 February order.
“It observed that Mr Shankar Sharma placed all his orders through broker, Bang Equity Broking Pvt. Ltd, which resulted in synchronized trades with the orders of Vrudhi Confinvest, placed through broker First Global Stock Broking Ltd,” Sebi said.
Synchronized trading is a form of stock manipulation which occurs when someone buys and sells the same stock around the same time in order to increase trading volumes.
The order, passed by Sebi director M.S. Sahoo, had said: “I hold Mr Shankar Sharma guilty for synchronizing the trades in violation of regulation.” Sebi also said Sharma did not reply in time to the first show cause notice issued by it in March 2004 to “delay the conclusion of the proceedings.”
Sebi had said that the trading pattern of Sharma and Mehra was “highly irregular” and showed Sharma had “indulged in a concerted attempt to interfere with the smooth functioning of the market and acted in a manner, which erodes the confidence of the investors and adversely affects the integrity and the healthy growth of the market.”