Stock Market 'Fraud': Court Orders FIR Against Madhabi Puri Buch, Five Others; Sebi, BSE To Challenge Order
The allegations pertain to the fraudulent listing of a company on the stock exchange with the active connivance of regulatory authorities, particularly SEBI, without compliance.
A special court in Mumbai has directed the Anti-Corruption Bureau to register an FIR against former SEBI Chairperson Madhabi Puri Buch and five other officials 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," the special ACB court judge, Shashikant Eknathrao Bangar, said in the order passed on Saturday.
The court said it will monitor the probe and sought a status report of the case within 30 days. The order 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 necessitates judicial intervention under the provisions of the Criminal Procedure Code, it added.
The complainant, 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.
The allegations pertain to the fraudulent listing of a company on the stock exchange with the active connivance of regulatory authorities, particularly SEBI, without compliance under the SEBI Act, 1992 and rules and regulations thereunder.
The complainant claimed that 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, the complainant said.
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.
In a statement, SEBI said that 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 the capital markets regulator to "place the facts on record".
"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," it said. "SEBI would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters."
India's first woman SEBI chief Buch, who faced conflict-of-interest allegations by the US-based short-seller Hindenburg Research and also political heat thereafter, completed her three-year tenure on Friday.
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, while simultaneously dealing with in-house employee protests against "toxic work culture".
