After investigations and hearings lasting over 18 months, the board of Securities and Exchange Board of India (Sebi) has cancelled the registration of First Global Stock Broking —owned by Shankar Sharma and wife Devina Mehra—as stock broker, merchant banker and portfolio manager. It has also cancelled the registration of Vruddhi Confinvest as sub-broker.
Sharma, however, alleged that he was targetted as he was a stakeholder in internet portal Tehelka.com which came out with an expose on defence deals.
The said order will come into effect immediately. ‘However as per the directions of the High Court of Bombay vide its order dated April 11, 2002 in writ petition (No 824 of 2002) this order stands stayed for four weeks from the date of receipt of the copy of this order by them. Till such time Sebi’s order dated May 25, 2001 passed under section 11B of Sebi Act, 1992 shall remain operative against them as directed by the Bombay High Court in its order,’ Sebi said.
However, Sharma said he would challenge the order in the Securities Appellate Tribunal (SAT). “As such there is no legal basis for the Sebi order for the time being. We are being victimised…. it’s still continuing,” Sharma told The Indian Express.
The Sebi had blamed First Global for hammering down the market after the presentation of Union Budget by Yashwant Sinha in March 2001. Sensex had crashed by over 161 points after Sinha presented his ‘dream’ budget. The market plummeted further later following the surfacing of a major scam, involving stock broker Ketan Parekh. Sharma, however, said he was no way involved in the bear hammering.
Sebi added, ‘Pursuant to the investigations in the wake of volatility in index movements during mid February and early March 2001, entities controlled and connected by/with Shankar Sharma and Devina Mehra like First Global Stock Broking Vruddhi Confinvest India were directed vide order dated May 25, 2001 not to undertake any fresh business till further orders. Subsequently an enquiry officer was appointed.’
According to the regulator, the enquiry officer submitted his report on January 9, 2002 and found, inter alia that First Global and Vruddhi Confinvest ‘artificially depressed prices of select scrips and were guilty of violating code of conduct…’ The enquiry officer recommended cancellation of Certificate of Registration of FGSB as stock broker and portfolio manager and Vruddhi as sub-broker. Thereafter, a show-cause notice was issued to FGSB and Vruddhi.