Daijiworld Media Network - Mumbai
Mumbai, Mar 3: In a significant legal development, a special court has directed the Anti-Corruption Bureau (ACB) to register a First Information Report (FIR) against former Sebi chairperson Madhabi Puri Buch and five other officials in connection with alleged stock market fraud and regulatory violations.
“There exists prima facie evidence of regulatory lapses and collusion, necessitating a thorough and impartial investigation,” stated special ACB court judge Shashikant Eknathrao Bangar in the order issued on Saturday. The court emphasized that the allegations outlined a cognizable offence, warranting further inquiry.
Judicial intervention became necessary, the order noted, as law enforcement agencies and the Securities and Exchange Board of India (Sebi) had not taken appropriate action despite the gravity of the allegations.
Apart from Buch, the officials named in the FIR include BSE’s Managing Director and Chief Executive Officer Sundararaman Ramamurthy, its then Chairman and Public Interest Director Pramod Agarwal, along with three Sebi whole-time members—Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney.
The court also declared that it would supervise the investigation and mandated the submission of a status report within 30 days.
In response, Sebi released a statement affirming its intent to pursue legal action against the order while reiterating its commitment to regulatory compliance.
The case originated from a complaint filed by Sapan Shrivastava, 47, who alleged large-scale financial fraud, regulatory misconduct, and corruption. The accusations specifically relate to the fraudulent listing of a company on the stock exchange with the complicity of regulatory authorities, particularly Sebi, without adherence to the Sebi Act, 1992, and associated regulations.
Shrivastava asserted that Sebi officials neglected their statutory duties, facilitated market manipulation, and enabled corporate fraud by approving the listing of a non-compliant company. He further alleged that despite multiple attempts to seek intervention from law enforcement and regulatory agencies, no action was taken.
Upon reviewing the evidence, the court instructed the ACB, Worli, Mumbai Region, to register an FIR under the provisions of the Indian Penal Code (IPC), the Prevention of Corruption Act, the Sebi Act, and other relevant laws.
Sebi’s statement on the matter clarified that a miscellaneous application had been filed before the ACB court, Mumbai, against the former Sebi chairperson, three current whole-time members, and two BSE officials. The application sought an investigation into the alleged irregularities in granting listing permission to a company on the BSE in 1994, reportedly bypassing the requirements of the Sebi Act, 1992, Sebi (ICDR) Regulations, 2018, and Sebi (LODR) Regulations, 2015.
Sebi further argued that the accused officials were not in their respective roles at the time of the alleged violations. It also criticized the court’s decision, claiming that the order was passed without issuing notice or allowing Sebi an opportunity to present facts. Additionally, Sebi characterized the complainant as a habitual litigant with a history of frivolous applications, some of which had previously been dismissed with penalties.
This development follows allegations against Madhabi Puri Buch during her tenure as Sebi’s first woman chief, including conflict of interest claims raised by US-based short-seller Hindenburg, as well as political scrutiny. Buch completed her three-year term on Friday.