Mumbai: The tribunal that hears appeals against orders passed by India’s capital market regulator on Wednesday upheld a Securities and Exchange Board of India (Sebi) order that restrained Shankar Sharma, vice-chairman and joint managing director of First Global Stock Broking Ltd, from trading in equities for one year.

Sebi had in its 13 February order barred Sharma from the stock markets for allegedly violating norms in 2001 by using fictitious trading accounts. Sharma challenged Sebi’s order at the Securities and Appellate Tribunal (SAT) and got a stay against it in March.

Fighting it out: Sharma claims that certain sections of the Sebi Act came into force only a year after the trades were executed. Abhijit Bhatlekar / Mint

In an email response to Mint queries, Sharma said, “We will study the order when we receive it, and file our appeal with the Supreme Court."

He also said that even though SAT has dismissed his appeal, the stay he had obtained against the Sebi order will apply till next week, when the appeals panel was to hear the case again.

“It (the latest order) has been stayed by SAT in a hearing held after the order was passed," Sharma said in his email.

Mint could not independently confirm the development.

The SAT order, passed by presiding officer N.K. Sodhi, said Sharma had executed a number of synchronized trades. “Such trades are only meant to create artificial volumes and they disturb the market equilibrium."

Synchronized trading is a form of stock manipulation, which occurs when someone buys and sells the same stock several times around in order to increase trading volumes.

Sharma had said in his appeal that these trades were executed as the broker had exhausted his trading limits. He had also said these trades were not manipulative but “only a shift in position to free the carry forward exposure space in the broker’s trading account".

According to him, certain sections of the Sebi Act came into force only a year after the trades were executed and were not applicable to the case.

However, SAT dismissed his contentions and said it is “satisfied that the appellant executed fictitious trades by taking opposite positions, which is not permissible". It also said the trades were “manipulative inasmuch as the buy and sell orders were placed at almost the same time".

The market 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 including Himachal Futuristic Communications Ltd, DSQ Software Ltd, Zee Telefilms Ltd, Mahanagar Telephone Nigam Ltd and Satyam Computer Services Ltd.

Sebi had 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, was cleared of all charges by Sebi.

Sebi had observed that 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".

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 had 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 says Sharma and Mehra’s?trading?pattern?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."