A special court in Mumbai has directed the Anti-Corruption Bureau (ACB) to register a First Information Report (FIR) against former Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch and five other officials. This decision comes in response to allegations of stock market fraud and regulatory violations.
The court’s order is based on a complaint by journalist Sapan Shrivastava, who accused SEBI and Bombay Stock Exchange (BSE) officials of facilitating fraudulent stock listings and market manipulation. The case revolves around the listing of Cals Refineries Ltd, which allegedly failed to meet the necessary compliance requirements.
Apart from Madhabi Puri Buch, the FIR has been ordered against:
- Sundararaman Ramamurthy – Managing Director and CEO of BSE
- Pramod Agarwal – Former BSE Chairman and Public Interest Director
- Ashwani Bhatia – SEBI’s Whole-time Member
- Ananth Narayan G – SEBI’s Whole-time Member
- Kamlesh Chandra Varshney – SEBI’s Whole-time Member
The court found prima facie evidence of regulatory lapses and a possible conflict of interest among the accused. The investigation will be monitored, with a status report due within 30 days.
The complaint alleges that SEBI and BSE officials allowed the fraudulent listing of Cals Refineries Ltd, which led to market manipulation and financial losses for investors. Shrivastava claims that despite multiple complaints, regulatory authorities did not take action, prompting him to seek judicial intervention.
According to the complainant, investors were misled by the company’s false compliance claims, causing significant financial losses. He believes that SEBI’s inaction and the involvement of top officials enabled such fraud to take place.
SEBI has strongly opposed the court’s order and plans to challenge it. The regulatory body has labeled Shrivastava a “frivolous and habitual litigant” with a history of filing complaints, many of which have been dismissed.
SEBI also pointed out that the allegations date back to 1994, long before the accused officials were in their respective positions. The regulator argued that the case was filed without allowing SEBI to present its side, making the court’s decision unfair.
The case highlights concerns about financial regulation and accountability in India’s stock market. If proven true, it could expose serious lapses in oversight and corporate governance within SEBI and BSE.
Additionally, this case could impact investor confidence in the stock market. If top regulators are found guilty of wrongdoing, it could raise questions about the effectiveness of SEBI’s monitoring mechanisms.
The FIR will now lead to a formal investigation by the Anti-Corruption Bureau. SEBI’s challenge to the order might delay proceedings, but the case will be closely monitored by investors, legal experts, and financial regulators.
With a 30-day deadline for a status report, more developments are expected soon. Whether this case results in any convictions or policy changes remains to be seen.
