Court orders FIR against ex-Sebi chief Buch, five others for fraud
A special court here has directed the Anti-Corruption Bureau (ACB) to register an FIR against former Sebi chairperson Madhabi Puri Buch and five officials in connection with an alleged stock market fraud and regulatory violations.
“There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe,” special ACB court judge Shashikant Eknathrao Bangar said in the order passed on Saturday.
The court order also noted that the allegations disclosed a cognisable offence, necessitating an investigation.
The inaction by law enforcement (agencies) and the Securities and Exchange Board of India necessitated judicial intervention under the provisions of the CrPC, it said.
Apart from Buch, the other officials against whom the court has ordered an FIR are BSE’s Managing Director and Chief Executive Officer Sundararaman Ramamurthy, its then Chairman and Public Interest Director Pramod Agarwal and Sebi’s three whole-time members — Ashwani Bhatia, Ananth Narayan G and Kamlesh Chandra Varshney.
The court said it would monitor the probe, and sought a status report within 30 days.
Sebi said it “will initiate appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters”.
The complainant, Sapan Shrivastava (47), 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 the 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 was 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 provisions of the IPC, the Prevention of Corruption Act, the Sebi Act and other applicable laws.
Reacting to the court order, Sebi, in a statement, said, “A miscellaneous application was filed before the ACB court, Mumbai, against the former chairperson of Sebi, three current whole-time members and two officials of the BSE.”
The application sought directions to the police to register an FIR and investigate 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 (ICDR) Regulations, 2018, and the Sebi (LODR) Regulations, 2015, the statement said.
“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,” it said.
“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,” the statement said.
India’s first woman Sebi chief Buch, who faced conflict of interest allegations by the US-based short-seller Hindenburg and also political heat thereafter, completed her three-year tenure on Friday.
Market regulator to challenge order
Sebi said it “will initiate appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters”
The allegations pertain to the fraudulent listing of a company on the stock exchange with the active connivance of the regulatory authorities, particularly Sebi
