The stock market regulator Securities and Exchange Board of India (Sebi) has rejected the application of First Global UK Ltd for grant of certificate of registration as a foreign institutional investor (FII). The regulator termed the applicant not a ?fit and proper person? for grant of application as FII, since Shankar Sharma, the director on the board of the applicant has been prohibited from associating with the Indian securities market for a period of one year for alleged unfair trade practices.
The order passed by Sebi on February 13, 2009, was later upheld by Securities Appellate Tribunal (SAT) and the Supreme Court upon being challenged by Sharma. In addition to the restrained order against Sharma, Sebi has also initiated two prosecutions against First Global Stock Broking (FGSB) and its associates, which is still pending before the Bombay High Court. Since the applicant is a wholly-owned subsidiary of FGSB and Shankar Sharma and Devina Mehra are the directors on the board of various First Global group companies, the regulator found no merits in the applicant?s submission that after the registration as FII, Sharma will in no way be involved in its day to day workings. The Sebi order noted that for grant of registration as an FII, the applicant has to pass the test of ?fit and proper person? criteria under the FII regulations.