New Delhi: A special Anti-Corruption court in Mumbai has ordered an FIR against former SEBI Chairperson Madhabi Puri Buch and top officials of SEBI and the Bombay Stock Exchange (BSE) over alleged stock market fraud and regulatory violations. The court has also directed the ACB to submit a status report within 30 days.
Petition Filed
Special Judge SE Bangar issued the order based on a petition by Thane-based journalist Sapan Shrivastava, who alleged massive financial fraud and corruption in a company's stock exchange listing. The complainant alleged that SEBI officials neglected their duty and allowed a company to be listed despite not meeting the required norms. This, he claimed, led to market manipulation and investor losses. The complaint also accused SEBI of colluding with corporate entities, enabling insider trading, and misusing public funds after the listing.
High-Profile Officials Named in the Complaint
The complaint names several top officials, including former SEBI Chairperson Madhabi Puri Buch, Whole Time Members Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney. It also includes BSE Chairman Pramod Agarwal and CEO Sundararaman Ramamurthy as respondents. Notably, none of the accused were present or represented in the court proceedings.
Judicial findings
- Prima facie evidence of regulatory lapses and collusion was found after reviewing the complaint and documents.
- The court stated that the allegations indicate a cognizable offense, requiring a detailed investigation.
- Emphasizing the need for a fair and impartial probe, the court directed action.
The Anti-Corruption Bureau (ACB), Mumbai, has been ordered to register an FIR under:
- Indian Penal Code (IPC)
- Prevention of Corruption Act
- SEBI Act
Court observations in SEBI case
1. Documents revealing procedural lapses and non-compliance in the IPO process,
leading to an irregular listing of the company.
2. Regulatory filings and stock market reports indicating
artificial inflation of share prices and market manipulation.
3• Correspondence from whistleblowers within SEBI,
indicating undue favoritism towards the accused company.
4• Financial reports, audit documents, and investor
grievances, demonstrating large-scale fraud and public deception.
5. The complainant specifically alleges:
* The SEBI permitted the listing of the accused company
despite its failure to comply with essential regulatory norms, including disclosure requirements and due diligence procedures mandated under the SEBI Act, 1992, SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.
6. The accused persons engaged in round-tripping, insider
trading, and price manipulation, misleading investors into believing the company was financially sound.
Considering the seriousness of the allegations, Judge Bangar directed the ACB to investigate and submit a status report within 30 days. The court stressed that judicial intervention was needed due to SEBI’s inaction and the potential risk to investor confidence.
