MUMBAI To the surprise of many, a special court here has directed the Anti-Corruption Bureau (ACB) to register an FIR against former SEBI chairperson Madhabi Puri Buch in connection with alleged capital market fraud and regulatory violations.
Special Court Orders FIR Against Buch
The court has also ordered ACB to register FIRs against Sundararaman Ramamurthy, managing director and chief executive officer of BSE, its then chairman and public interest director Pramod Agarwal, and SEBI’s three whole time members Ashwani Bhatia, Ananth Narayan, and Kamlesh Chandra Varshney.
In the order passed on Saturday, the special court judge Shashikant Eknathrao Bangar said, “There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe.”
The court will monitor the probe, and sought a status report of the case within 30 days. The court order noted that allegations disclose a cognisable offence, necessitating an investigation.
The inaction by law enforcement agencies and SEBI necessitates judicial intervention under the provisions of the Criminal Procedure Code, the order said.
The complainant, Sapan Shrivastava, a media reporter, had sought an investigation into the alleged offences committed by the proposed accused, involving large-scale financial fraud, regulatory violations and corruption.
‘Facilitated Market Manipulation’
The allegations pertain to the fraudulent listing of a company on the stock exchange with the active connivance of regulatory authorities, particularly the SEBI, without compliance under the SEBI Act, 1992 and rules and regulations thereunder.
The court, after considering the material on record, directed the ACB Worli, Mumbai Region, to register an FIR under relevant provisions of the IPC, Prevention of Corruption Act, SEBI Act, and other applicable laws.
The complainant had claimed that the SEBI officials “failed in their statutory duty”, “facilitated market manipulation”, and “enabled corporate fraud by allowing the listing of a company that did not meet the prescribed norms”.
The complainant said, “Despite approaching the police station and regulatory bodies concerned on several occasions, no action has been taken by them.”
“A Miscellaneous Application was filed before the ACB Court, Mumbai against the former Chairperson of SEBI, three current Whole Time Members of SEBI and two officials of the BSE. The application sought directions for the Police to register an FIR and investigate into the alleged irregularities in granting listing permission to a company on the BSE in 1994, without complying with the provisions of the SEBI Act, 1992, SEBI Regulations, 2015 and 2018,” SEBI said here on Sunday.
Buch, the first woman SEBI chief, who faced conflict of interest allegations by the US-based short-seller Hindenburg, and political heat thereafter has completed her three-year tenure on Friday.
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“Even though these officials were not holding their respective positions at the relevant point of time, the court allowed the application without issuing any notice or granting any opportunity to SEBI to place the facts on record,” SEBI added.
“The applicant is known to be a frivolous and habitual litigant, with previous applications being dismissed by the Court, with imposition of costs in some cases. SEBI would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters,” SEBI added.
Conflict Of Interest Allegations
Buch, the first woman SEBI chief, who faced conflict of interest allegations by the US-based short-seller Hindenburg, and political heat thereafter has completed her three-year tenure on Friday.
Buch had made significant strides in many areas of market development and regulations ad guidelines, including faster settlements in equities, enhanced foreign portfolio investor disclosures and increasing mutual fund penetration through Rs 250 SIP.
Of late, Buch saw heightened controversies, when she battled a series of allegations by Hindenburg and the opposition party. She had been dealing with employee protests against alleged “toxic work culture”.
Agencies add: In August 2024, she faced pressure to resign after the Hindenburg Research accused her of having a conflict of interest that prevented a thorough examination of manipulation and fraud claims at the Adani Group.
Hindenburg accused Madhabi Puri Buch and her husband Dhaval Buch of investing in offshore entities that were allegedly part of a fund structure in which Vinod Adani—the elder brother of Adani group founder chairman Gautam Adani—also had investments.
Buchs have denied the allegation, saying the investments were made before she joined the regulator and she had complied with all disclosure requirements.
