A special court in Mumbai on Saturday directed the Anti-Corruption Bureau in Mumbai to register a first information report against Madhabi Puri Buch, the former chairperson of Securities and Exchange Board of India, and five other officials in connection with alleged stock market fraud and regulatory violations, reported PTI.

The direction by special Anti-Corruption Bureau court judge Shashikant Eknathrao Bangar came on a complaint claiming that officials at the SEBI allowed the listing of a company that did not meet the prescribed norms, thereby facilitating market manipulation and corporate fraud.

“The allegations disclose a cognizable offense, necessitating an investigation,” Bangar was quoted as having said by The Indian Express. “There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe.”

Apart from Buch, three whole-time members of the SEBI, and Bombay Stock Exchange Chairman Pramod Agarwal and Chief Executive Officer Sundararaman Ramamurthy, have been named in the complaint.

The judge said that the “inaction” of SEBI officials and law enforcement agencies should be probed.

The Anti-Corruption Bureau was directed to register an FIR under the Prevention of Corruption Act, the Securities and Exchange Board of India Act and the Indian Penal Code. The court stated it will monitor the probe and sought a status report within 30 days.

Responding to this, SEBI said the officials named in the complaint “were not holding their respective positions at the relevant point of time”, reported The Indian Express. It added that the court had allowed the application without allowing the regulatory body “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,” the regulatory body was quoted as having stated. “SEBI would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters.”

The complaint

The complainant in the case, Sapan Shrivastava, a Dombivli resident who claimed to be a journalist, claimed that he and his family had invested in shares of Cals Refineries Limited on December 13, 1994, which was listed at the Bombay Stock Exchange, reported The Indian Express.

He said he had suffered huge losses, said Shrivastava, adding that SEBI and BSE failed to protect the interests of investors by neglecting the crimes of the firm and listing it against the law.

Shrivastava said he was forced to approach the court as the police and regulatory bodies had not taken action on his complaint.

The tenure of Buch as the chairperson of the market regulatory authority ended on February 28. She had taken over the position on March 2, 2022, becoming the first woman chief of the SEBI.

In August, American investment firm Hindenburg Research alleged that the former SEBI chief and her husband Dhaval Buch had “hidden stakes” in offshore entities tied to stock price manipulation and money laundering by the Adani Group.

Madhabi and Dhaval Buch denied the allegations.

This came 18 months after Hindenburg Research accused the Adani Group of engaging in accounting fraud and money laundering using offshore tax havens. The market regulator, led by Madhabi Buch, had “drawn a blank” in its investigation of these allegations last year and told a Supreme Court-appointed panel that further inquiry could be a “journey without a destination”.

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