SAT upholds SEBI ban on First Global’s Sharma

Vice-chairman and joint managing director First Global Shankar Sharma

The Securities and Apellate Tribunal (SAT) on Wednesday dismissed an appeal by First Global Stockbroking chief Shankar Sharma against a Securities and Exchange Board of India order barring him from trading in equities for a year for fictitious trading.

The tribunal agreed with SEBI that Sharma executed fictitious and manipulative trades in 2001 that disturbed the market equilibrium. SAT has, however, stayed SEBI's ban, which allows Sharma to continue trading until it hears an appeal next week to decide on the stay.

The vice-chairman and joint managing director of First Global plans to file an appeal in the Supreme Court. "The order is negative but has been stayed. We will review the order which we have not got till now. Thereafter we will appeal in the Supreme Court," he said.

In February this year, SEBI prohibited Sharma from trading in securities for a year, alleging that he carried out 'synchronised trading' in select stocks in 2001. This is a form of stock manipulation where opposite buy and the sell orders are put into the system on the same stock at almost the same time, in order to increase volumes.

The market regulator had said Sharma executed a ''large number of transactions'' in 10 shares including Global TeleSystems, HFCL, MTNL, Satyam Computer, SBI and Infosys Technologies, among others, which were synchronised by First Global, Bang Equity and sub-broker Vruddhi Confinvest. This created excessive volatility and unusual price movements in these stocks, the order said.

Sharma - who is known for his strong bearish views on the market, and is often pitted against investor Rakesh Jhunjhunwala in the media - appealed to the SAT against this order, which was stayed by the Tribunal in March.