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"Anyone who can kill the market by selling 100 shares of Wipro must be God"

From success to notoriety has been a short haul for Shankar Sharma of First Global. Investment banker, stockbroker, angel investor for Tehelka.com, Sharma now finds himself in the eye of the storm.

Accused of hammering down the market in the wake of Yashwant Sinha's dream Budget with insider knowledge of the Tehelka revelations, is Sharma guilty? Or is he just a victim of political afterplay? Pritish Nandy finds out.

You have been barred from doing your business. What do you think are the exact reasons for this step?

The reasons are obvious, Mr Nandy. Those in power tried to harass us in every way possible after the Tehelka revelations hit the headlines. When they found they could not pin anything on us, when they found that everything we had done over the years was in perfect order and well within the laws of the land, they were desperate to find something they could intimidate us with.

Every arm of the state was pushed into action. We were told, again and again, in hushed whispers: Get out of Tehelka and you can go back and do your business exactly as you were doing before. But we believe in India. We believe in our institutions. In justice, fairplay, integrity. We believe that this democracy was not built by our forefathers to intimidate citizens and stop them from doing legitimate business. Why should we crawl before anyone? We will not compromise on our rights as free citizens of India. We will fight all the way for justice.

Why did you dump your shares in the market just before the Tehelka revelations? The clear suspicion is that you knew about them in advance. You had insider information.

What insider information! We knew, in fact, we have been telling everybody who was ready to listen, that the economy is heading for a slowdown. You are welcome to check our research reports to see what we have been advising our clients. We are the only people who never rode the tech bandwagon. We did not believe in it. We anticipated long before others that the US economy was heading for trouble. And, yes, we were also clear that if the US economy were in trouble, India would also be in trouble.

You do not need rocket science to figure this out. We have one of the best research wings in the business. It is our job to advise our clients. This is what we have done over the years and won accolades. We were the first broking house to get a licence to trade on the London Stock Exchange, one among 300 in the world. Devina Mehra (my wife) and I, in our individual capacities, hold five independent licences each in the United States, which makes us among the most qualified people to conduct securities business out there. These licences do not come easy. The rules are rigorous out there.

But that does not answer my question.

All I am saying is that each buy and sale decision we take is determined by research. Not anything else. Look, the Tehelka expose came out on March 13. On March 23, the income tax guys raided us. On March 27, the second working day after March 23, we got our first communication from Sebi, demanding the financials of Tehelka. A Delhi official from Sebi visited us. On April 18, the FIR was lodged against us. The same evening, the Sebi order was faxed to us. At 9:15 in the night, in fact! You judge whether this is too much of a coincidence or not.

What about the charges, the facts?

Much of the information given in the Sebi report contains data that is materially false.

False? That's a strong charge.

Yes, false. For instance, in a table giving instances of large net sales of First Global on the NSE in various scrips across different settlements, more than half the transactions cited are wrong. For example, net sales in Himachal Futuristic are shown to be 60,000 shares during settlement number 3 and 75,000 shares during settlement number 6 whereas the actual position was exactly the opposite. There was a net purchase of 5,000 shares in one and the other was zero. There was an identical mistake in Satyam Computer. They showed net sales of 608,474 in settlement number 1 and 130,000 in settlement number 4 whereas the actual position was net purchase of 5,000 in one and zero in the other. A similar mistake happened in the case of DSQ Software. Net sales of 300,000 in settlement number 3 and 100,220 in settlement number 4 were alleged. The actual positions were zero and minus 220.

I can give you countless examples like this. For instance, they showed First Global as large net sellers across arbitrarily selected time bands. In four of these cases, we were actually net buyers. In some cases, they accused us of selling when we were actually buying! Either the person compiling the data had no idea what he was doing or those making the charges against us did not actually see the facts of the case before they went for us. This is not a case against us. It is a witch-hunt against an organisation that has been globally recognised as one of the best in terms of prevalent practices.

What are you planning to do now?

What can I do but fight back to save our reputation? It has taken years of hard work and effort to build it and we cannot give it up without a struggle. The issue is simple: No single individual, no single institution can ever suppress a market that is rising. Just as no single individual, no single institution can ever raise a market that is falling. This is a completely mistaken notion. A notion that is being falsely spread. People buy shares. People sell shares. The market carries on in the direction that it wants to go.

Anyone who can kill the market by selling 100 shares of Wipro must be God. I would not even pretend to be able to control or change the course of the market. In fact, anybody who does is a liar. No one can. The market is the arbiter of its own destiny.

Look at the Nasdaq. It fell, during the same one month that we are being investigated for, from 2600 to 1600. In fact, the drop was less out here. But there was no witch-hunt there. No one went out to investigate why the market fell and who was responsible for it. For everyone knows that markets rise and fall on their own and no one, apart from God, can change their course through individual effort. But look what they have done to us. We have closed down over 60 per cent of our branches all over India. We are laying off almost 40 per of our workforce. These are brilliant young people who know their jobs and have set the highest standards in the business. Is this fair to them? Is it fair to us?

And one last point: the clincher. Short-sellers were accused of dropping the market. So short sales were banned. After the ban, the market has fallen even more. Doesn't this disprove the very fundamental argument against us?

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