Sebi bans First Global’s Shankar Sharma for 1 yr

Sebi bans First Global’s Shankar Sharma for 1 yr
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First Published: Sat, Feb 14 2009. 12 36 AM IST
Updated: Sat, Feb 14 2009. 12 36 AM IST
Mumbai: India’s capital markets regulator on Friday ordered Shankar Sharma, vice-chairman and joint managing director of First Global Stock Broking Ltd, not to trade in shares for one year.
The restraint is effective four weeks from the time the Securities and Exchange Board of India informs Sharma of its order. The restriction is on account of violation of norms during the stock market swindle known as the Ketan Parekh scam.
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The order, passed by Sebi director M.S. Sahoo, 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”. The Sebi order said Sharma had indulged in fictitious trading.
Ketan Parekh, a Mumbai-based stockbroker, was involved in the stock market scam of 2000-2001. Parekh allegedly rigged share prices of firms in collusion with promoters through circular trading. Under this method, sell orders are entered by a broker who knows that offsetting buy orders for the same number of shares at the same time and at the same price have either already been or will be entered. As a result, these trades don’t represent any change in the beneficial ownership of the security. In December 2003, Sebi banned Parekh and associated firms from trading in the market for 14 years.
In its order against Sharma, the regulator said that First Global and a Sebi-registered sub-broker, Vrudhi Confinvest India Pvt. Ltd, had made large transactions in 10 securities that Parekh had used, such as Himachal Futuristic Communications Ltd, DSQ Software Ltd and Zee Telefilms Ltd.
Devina Mehra, also a director of First Global, has been cleared of charges. She said the order “is blatantly illegal as per Sebi’s own law and is pursuing to be a witch hunt since 2001”. She added, “These particular charges have been investigated by Sebi with the full inquiry and Shankar had been exonerated at that time.”
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First Published: Sat, Feb 14 2009. 12 36 AM IST