Court Orders FIR Against Ex-SEBI Chief Madhabi Buch Over Stock Fraud Allegation

Court Orders FIR Against Ex-SEBI Chief Madhabi: A special court here has ruled that the Anti-Corruption Bureau (ACB) must register a first information report (FIR) against former SEBI (Securities Exchange Board of India) chairperson Madhabi Puri Buch and five other officials in connection with the alleged stock market fraud and regulatory violations.

As per the order on Saturday, the special judge of ACB court, Shashikant Eknathrao Bangar, said, "There are sufficient prima facie evidence of regulatory lapses and collusion, warranting a fair and impartial investigation."

He added that the court will supervise this particular investigation and requested a status report (of the case) within 30 days.

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The court order also indicated that the allegations disclosed a cognizable offence, which required a proper investigation.

There had been inactions from the law enforcement agencies and SEBI, which indeed necessitated intervention by the judicial arm under the provisions of CrPC, it added.

The complainant, who happens to be a media reporter, had sought an inquiry concerning the alleged acts perpetrated by all the proposed six accused, which caused, as alleged, colossal financial fraud, regulatory violations, and corruption.

The allegations involve fraudulent listing on the stock exchange with the active connivance of regulatory authorities-in particular the SEBI-without compliance under the SEBI Act, 1992 and rules and regulations thereunder.

The complainant claimed that the SEBI officials had abrogated their statutory duty by facilitating market manipulation and perpetrating corporate fraud by having the listing of a company that failed to meet the prescribed norms.

Despite several representations made at the police station and before the concerned regulators, nothing has been done in this regard, said the complainant.

The court, on examination of the material on record, ordered the ACB Worli, Mumbai Region, to register an FIR under the relevant provisions of the IPC, Prevention of Corruption Act, SEBI Act, and any other law applicable.

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Buch, the first woman head of SEBI in India, completed her three-year tenure on Friday, battling allegations by US-based short-seller Hindenburg and facing political pressure afterward.

Buch made significant strides during her tenure in terms of faster settlements in equities, enhanced FPI disclosures, and increasing penetration of mutual funds through Rs 250 SIP; however, the last year of her term saw a major controversy when she grappled with a slew of allegations from Hindenburg and Congress party, alongside addressing in-house employee protests against "toxic work culture".

In August last year, Buch was reportedly pressured to resign amid concerns that her actions as SEBI head constituted a conflict of interest that stymied an investigation into claims of manipulation and fraud against the Adani Group.

Hindenburg alleged Madhabi Puri Buch and her husband Dhaval Buch invested in offshore entities allegedly forming part of a fund structure in which Vinod Adani-the elder brother of Adani group founder chairman Gautam Adani-also had investments.

Buchs refute the allegations, stating that the investments were made before she joined the statutory authority and that she has fully complied with all disclosure requirements. Recently, Hindenburg announced the closure of business.

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