Did bear operator First Global use its Tehelka links to indulge in insider trading?
On March 13, when the Sensex crashed by over 200 points in a single day—affected by tehelka.com's defence deal expose—it is now being alleged that First Global could have had access to Tehelka's story before it became public and, therefore, short-sold aggressively to earn easy profits. This is a serious insider trading charge and if true and proved, sebi can take strong action against First Global. But this seems far-fetched since sebi banned short-selling on March 5.
Interestingly, with no revenues or profits in sight for Tehelka, First Global wrote to major media organisations in January, offering its stake for sale. In February, Zee expressed interest in picking up 26 per cent of Tehelka in a stock swap deal but Zee's share price has been in free fall since then. To add a further twist, First Global has been openly negative on the Zee scrip for more than a year now. So what's going on?
Even before the Tehelka tapes were made public, sebi was investigating First Global on charges of colluding with other brokers to artificially depress share prices. In the case of First Global, sebi also wants to find out if there was any squaring off transactions by it in any of its own dealings as a foreign institutional investor (First Global is a registered fii). sebi regulations do not permit fiis and domestic institutional investors to square off transactions within a settlement cycle. All institutional sales and purchases have to necessarily result in delivery and payment.
First Global is owned by Shankar Sharma and Devina Mehra. Sharma quit Citibank in the immediate aftermath of the 1992 Securities Scam, in which Citibank was one of the foreign banks indicted by the Reserve Bank of India for involvement in the scam. Not a very encouraging entry in anybody's resume.