Bar&Bench News Network
J. Sagar's Mumbai Partner, Somashekar Sundaresan, who is a favorite to secure orders against the Securities and Exchange Board of India (SEBI), was unable to convince the Securities Appellate Tribunal, which upheld a SEBI order restraining Shankar Sharma [pictured], Vice-Chairman and Joint MD of First Global Stock Broking, from trading in equities for one year. Sharma made waves in the market when he predicted the stock market meltdown of 2008 and also the end of sub-prime, as well as the cooling of oil prices, from $142 a barrel to $50 per barrel.
Shankar Sharma was found guilty of synchronizing trades on a large scale, which resulted in the creation of artificial volumes of about ten stocks including Satyam Computers, Infosys and Wipro in 2001. Observing excessive liquidity, the SEBI commenced investigation in 2001 to find out whether these were premeditated transactions for building volumes through Sharma's brokerage and sub-brokerage accounts.
SEBI had issued several notices in the matter which were challenged in the Bombay High Court, with P Chidamabaram, the present Home Minister and former Finance Minister, appearing on behalf of Shankar Sharma. The SEBI has been aggressively pushing for imposing strictures against Shankar Sharma and several heavyweights, including the then-Attorney General, Soli Sorabjee, appeared on behalf of the SEBI.
The SAT dismissed Sharma's appeal and held that it is "satisfied that the appellant executed fictitious trades by taking opposite positions, which is not permissible." It also said the trades were "manipulative, inasmuch as the buy and sell orders were placed between themselves and at the same time."
The SEBI has been criticized in the past for having a weak legal team, leading to fewer favourable orders. This year, the SEBI has strengthened its legal team, hiring 44 fresh law graduates as permanent staff. The fresh hires take the strength of the SEBI's the legal team to 80 law officers.
The only recourse now left to Sharma is to move the Supreme Court against the one year ban.
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- 1. "Hiring of 44 fresh law graduates as permanent staff conceptually is a self-contradictory view though a progressive move. But facts remain to be seen as to how that works wonder with the fresh hands as per the SEBI norms what is dissatisfied with even a seasoned jurist as Mr. Soli Sorabjee.". Pradeepta Mishra, HC Of Orissa, Cuttack
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The Viewpoint: Indemnification Provisions - Is the fight on the indemnity clause worth the effort?
May 17, 2012 | Bar & Bench brings to you the twentieth article on 'The Viewpoint' series with its Knowledge Partner AZB & Partners. AZB Senior Associate Nandish Vyas and Associate Pranati Ishwar in this article seek to examine the context in which indemnification rights are relevant for acquisition transactions, and also seek to explore if there are areas where they are potentially not worth the comments (4)
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