A special court has ordered the Anti-Corruption Bureau (ACB) to register an FIR against former SEBI chairperson Madhabi Puri Buch and five other officials over allegations of stock market fraud and regulatory violations. The court cited “prima facie evidence” of lapses and possible collusion, warranting a thorough investigation.
Court Flags Serious Regulatory Failures
Judge Shashikant Eknathrao Bangar, presiding over the special ACB court, ruled that the allegations disclose a cognisable offence, making an investigation necessary. The order, passed on Saturday, called for a fair and impartial probe, indicating that law enforcement agencies had failed to act on their own.
“The inaction by law enforcement and SEBI necessitates judicial intervention under the provisions of the CrPC,” the order stated, underscoring concerns about regulatory oversight.
The court’s directive has put SEBI and stock market regulators under intense scrutiny, raising fresh questions about governance and accountability in India’s financial markets.
Who Are the Officials Named in the FIR?
Apart from Madhabi Puri Buch, the FIR will include:
- Sundararaman Ramamurthy – Managing Director and CEO of BSE
- Pramod Agarwal – Former Chairman and Public Interest Director of BSE
- Ashwani Bhatia – Whole-time Member, SEBI
- Ananth Narayan G – Whole-time Member, SEBI
- Kamlesh Chandra Varshney – Whole-time Member, SEBI
The court has also decided to monitor the investigation and has asked for a status report within 30 days.
Allegations of Fraudulent Listing and Regulatory Violations
The case stems from a complaint filed by Sapan Shrivastava (47), who has alleged large-scale financial fraud, regulatory violations, and corruption in the stock market.
According to the complaint, SEBI and other officials allegedly facilitated the fraudulent listing of a company on the stock exchange. The listing reportedly bypassed compliance norms under the SEBI Act, 1992, and relevant regulations.
The exact nature of the fraud is yet to be disclosed, but the case is expected to shed light on potential gaps in regulatory enforcement.
SEBI Dismisses Allegations, Calls Complainant a “Frivolous Litigant”
In response to the court order, SEBI issued a statement defending its officials and downplaying the credibility of the complainant.
“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 BSE. 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 stated.
Despite SEBI’s rebuttal, the court has taken the matter seriously, marking a rare instance where top financial regulators are under criminal investigation.
ACB Investigation: What Comes Next?
With the FIR ordered, the ACB will now initiate a probe, which could involve:
- Examining documents related to the alleged fraudulent listing
- Investigating communications between SEBI officials and stock market entities
- Questioning the accused individuals
- Checking whether existing laws were deliberately bypassed
The case has drawn significant attention, with industry insiders closely watching how authorities handle allegations involving top regulatory figures.
For now, SEBI and BSE are on the defensive, while the court’s decision has ignited a fresh debate on the effectiveness of India’s market watchdogs.
