The Securities Appellate Tribunal (SAT) has stayed the Securities and Exchange Board of India (Sebi) order against stock broker and First Global's director Shankar Sharma.
Sharma will now be able to trade in the equity markets till SAT's stay order is in effect. Passing the order today, Justice N K Sodi said that the balance of convenience was in favour of Sharma as Sebi's order last month came after a lot of time had passed since SAT set aside the regulator's earlier order of 2004.
Sebi had banned Sharma from trading in the equity markets for one year on February 13, 2009. Sebi whole-time member M S Sahoo had passed the order in relation to a 2001 investigation, and charged Sharma for fictitious trades and stock market manipulation.
The order had said that, during the concerned period, Sharma executed huge quantities of trades as a client of Bang Equity. These trades of Sharma were matched through synchronised trades executed by Vrudhi Confinvest, which is a fully-owned company by Sharma and his wife, Devina Mehra, as a client of First Global Stock Broking.
The details of these trades showed that there were hardly any time/quantity/price differences between the buy and sell orders for most of the trades. Sebi also observed that in most of the cases, the rate, quantity and timing of the buy orders matched, or were very close to similar parameters of the sale orders. Therefore, the parties engaged in synchronised deals, Sebi said.
“These trades were nothing but fictitious trades and involved no change in beneficial ownership. Therefore, these created the appearance of an artificial market and distorted the price discovery process on the exchange,” Sebi had said in its February order.
Sharma was earlier banned by the regulator for one year in 2001, but the order was set aside by SAT in 2004 on the grounds that it was passed beyond the 30-day period prescribed under the then Regulation 29(3) of the Securities and Exchange Board of India (Stock Brokers and Sub Brokers) Regulations, 1992.
Sahoo was not available for comments. Final hearing of the matter will be on April 13, 2009.
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