Stock Market Fraud: FIR to be filed against former SEBI Chief Madhabi Puri Buch and five others, Mumbai court orders

New Delhi| A special court in Mumbai has directed the Anti-Corruption Bureau (ACB) to register an FIR against former SEBI chairman Madhabi Puri Buch and five other officials on charges of alleged fraud and regulatory violations in the stock market.

Justice Shashikant Eknathrao Bangar of the Mumbai-based special ACB court said in the order passed on Saturday that prima facie there is evidence of regulatory lapses and collusion, which requires an impartial investigation. The court said it would monitor the investigation and sought a status report of the case within 30 days. The court has also said in the order that the allegations reveal a cognizable offence, for which investigation is necessary.

The order said the inaction of law enforcement agencies and the Securities and Exchange Board of India (SEBI) requires judicial intervention under the provisions of the CrPC (Code of Criminal Procedure).

Apart from Madhabi Buch, other officials against whom the court has ordered registration of FIR include BSE Managing Director and Chief Executive Officer (CEO) Sundararaman Ramamurthy, its then Chairman and Public Interest Director Pramod Agarwal and three whole-time members of SEBI Ashwini Bhatia, Ananth Narayan ji and Kamlesh Chandra Varshney are included.

The complainant made serious allegations
Complainant Sapan Srivastava, who is a media reporter, had sought investigation into the alleged crimes, which include large-scale financial fraud, regulatory violations and corruption.The complainant claimed that SEBI officials failed in their statutory duty, promoted market manipulation, and opened the way for corporate fraud by allowing listing of a company that did not meet the prescribed norms. The complainant said that despite contacting the police station and the concerned regulatory bodies several times, no action was taken.

The court, after considering the material on record, has directed ACB Worli Mumbai Region to register an FIR under relevant provisions of the IPC, Prevention of Corruption Act, SEBI Act and other applicable laws. India’s first woman SEBI chief Butch was accused of conflict of interest by US-based research and investment company Hindenburg Research. Butch then completed his three-year term on Friday amid political tensions.

Madhabi Buch was in controversies since the beginning
Madhabi Puri Butch took over as SEBI Chairperson on 2 March 2022. She became the first woman chairperson of SEBI and was also the first person to come from the private sector. She was accused of several serious allegations of irregularities by the American short seller firm Hindenburg. She has also been facing many allegations from time to time from opposition parties. Her tenure ended last week. She has been replaced by Tuhin Kant Pandey, a 1987 batch IAS officer of Odisha cadre, as the head of SEBI.