MUMBAI: A special Anti-Courrption Bureau (ACB) court here directed the Mumbai Police to file an FIR against former Sebi chairperson Madhabi Puri Buch and five senior officials of the Bombay Stock Exchange (BSE) in connection with alleged stock market fraud and regulatory violations.
"There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe," ACB court judge, SE Bangar, said in the order passed on Saturday.
The court ordered the ACB to file a status report within next 30 days.
It also noted that the allegations disclose a cognisable offence, necessitating an investigation. The inaction by law enforcement (agencies) and the Securities and Exchange Board of India (Sebi) necessitates judicial intervention under the provisions of the CrPC, the court added.
The court was hearing a petition filed by Thane-based journalist Sanap Srivastav alleging financial fraud, regulatory violations, and corruption involving former SEBI chairperson Madhabi Puri Buch, SEBI officials Ashwani Bhatia, Ananth Narayan, Pramod Agarwal, and BSE MD and CEO Sundararaman Ramamurthy. The petition claims irregularities in company listings on the Bombay Stock Exchange (BSE), invoking various sections of the Indian Penal Code and the Prevention of Corruption Act concerning criminal misconduct by public servants and illicit gratifications. The court has stated it will oversee the investigation conducted by ACB
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 complainant 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.
Despite approaching the police station and regulatory bodies concerned on multiple occasions, no action has been taken by them, he added.
SEBI stated that it was not given a chance to present its case and emphasized that none of its current officials were in office when the alleged misdeeds occurred. It also warned of potential legal action and noted that the petitioner has a history of filing frivolous petitions.
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.
Buch, who is the agency's first woman chief, had faced conflict of interest allegations by the US-based short-seller Hindenburg and also political heat thereafter.
She assumed office on March 2, 2022 and completed her three-year tenure on Friday. She was replaced by Tuhin Kanta Pandey as the new Sebi Chief. Traditionally, Sebi hosts a farewell for outgoing chiefs, but no such event was held, marking an abrupt exit.
Her departure suggests Buch was unprepared for the transition—an outcome she likely did not anticipate when she took charge in 2022.
Although, Buch in her tenure made significant strides in areas like faster settlements in equities, enhanced FPI disclosures, and increasing mutual fund penetration through Rs 250 SIP, the last year of her tenure saw heightened controversy when she battled a series of allegations by Hindenburg and the Congress party, while simultaneously dealing with in-house employee protests against "toxic work culture."
In August last year, Buch faced pressure to resign after the Hindenburg Research accused her of having a conflictconflict 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.
The Buchs have denied the allegation, saying the investments were made before she joined the regulator and she had complied with all disclosure requirements.
Hindenburg recently announced shutting down its business.
(With additional inputs from PTI)