Sebi board to hear Shankar Sharma case on January 29

Mumbai, January 23: | Updated: Jan 24 2002, 05:30am hrs
Barred stock-broking firm First Global’s owner Shankar Sharma will be given a personal hearing by the full board of the Securities and Exchange Board of India (Sebi) on January 29. The Sebi board is expected to meet in Mumbai on Tuesday next primarily to discuss the issue of demutualisation of the stock exchanges.

The board is also expected to discuss the issue of whether brokers can hold the position of the directors on the governing board of stock exchanges.

Mr Sharma, with his wife Devina Mehra and two of his firms -- Vrudhi Confinvest and First Global Stock Broking Pvt Ltd -- were barred from undertaking any fresh business as stock brokers, underwriters and portfolio managers last year after Sebi found them guilty of playing significant role in the stock market crash of March 2001. These entities were barred by Sebi from undertaking fresh business under section 11 (A) and 11 (B) of Sebi Act, 1992 in June 2001.

The Sebi board is also expected to discuss the important issue of demutualisation of stock exchanges in its January 29 board meeting. A senior Sebi official said, "We have asked all our nominees to withdraw from the board of all SEs. It has also been decided that brokers cannot hold any post as president, vice-president or treasurer on the governing board. However, we are yet to decide on whether the governing board of the exchange should have any representation from brokers as directors or not. This issue will be taken up at the next Sebi board meeting, which is being convened on Jan 29," he added.

"The Sebi board was to meet next month, but owing to the urgency of the issue, the meeting will take place by this month-end,’’ the official said.

As a part of demutualisation process -- part of the capital market reform process initiated by ministry of finance (MoF) -- finance minister Yashwant Sinha announced on the floor of the house last year in March that all the deferral products available in the Indian capital market would be discontinued with the introduction of rolling settlement on the bourses from July 2; and all SEs across the country would be demutualised before the end of ficsal 2001-02.

Mr Sharma of First Global challenged Sebi’s order of June 2001, debarring him and his firms from doing fresh business in the Securities and Appellate Tribunal (SAT) which asked the regulator to complete the investigation during the specific time period.

The deadline for completing the investigation were extended by the appellate authority twice on the request from the regulator as Sebi has contested that Mr Sharma is not co-operating with the investigations. The deadline to complete the investigations were extended for the second time in December last when Mr Sharma was not available for questioning when he was picked up by another agency, Enforcement Directorate (ED), for questioning in a case related to violation of Foreign Exchange Regulation Act (Fera) while buying the shares of Himachal Futurtistic Communicatiuons Limited (HFCL).