Mumbai: A special court here has directed the Anti-Corruption Bureau (ACB) to register an FIR against former Sebi chairperson Madhabi Puri Buch and five other officials in connection with alleged stock market fraud and regulatory violations.
There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe, the special ACB court judge, Shashikant Eknathrao Bangar, said in the order passed Saturday. The court said it will monitor the probe and sought a status report within 30 days.
Apart from Buch, the other officials against whom the court has ordered registration of the FIR are BSE’s Managing Director and Chief Executive Officer Sundararaman Ramamurthy, its then chairman and public interest director Pramod Agarwal and Sebi’s three whole time members Ashwani Bhatia, Ananth Narayan G and Kamlesh Chandra Varshney.
The Sebi in a statement said it “would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters”.
The SEBI said the application, which sought directions to the police to register an FIR and investigate alleged irregularities in granting listing permission to a company on the Bombay Stock Exchange in 1994, was allowed by the court “even though these officials were not holding their respective positions at the relevant point of time”.
The Bombay Stock Exchange, in a statement, termed the application as “frivolous and vexatious in nature.”
The court order said the inaction by law enforcement (agencies) and the Securities and Exchange Board of India (SEBI) necessitates judicial intervention under the provisions of the CrPC (Criminal Procedure Code).
The complainant, Sapan Shrivastava (47), who is a media reporter, had sought an investigation into the alleged offences committed by the proposed accused, involving largescale financial fraud, regulatory violations and corruption.
The allegations pertain to the fraudulent listing of a company on the stock exchange with the active connivance of regulatory authorities, particularly the Sebi, without compliance under the SEBI Act, 1992 and rules and regulations thereunder.
The complainant claimed that the Sebi officials failed in their statutory duty, facilitated market manipulation, and enabled corporate fraud by allowing the listing of a company that did not meet the prescribed norms.
Despite approaching the police station and regulatory bodies concerned on multiple occasions, no action has been taken by them, the complainant said.
As per the order, the complainant had submitted documents revealing procedural lapses and noncompliance in the IPO process, leading to an irregular listing of the company.
He had placed on record regulatory filings and stock market reports indicating artificial inflation of share prices and market manipulation, the correspondence from whistleblowers within SEBI, indicating undue favouritism towards the accused company, it said.
Financial reports, audit documents, and investor grievances, demonstrating large-scale fraud and public deception were also submitted by the complainant.
The complainant has alleged that the accused persons engaged in round-tripping, insider trading, and price manipulation, misleading investors into believing the company was financially sound.
The court, after considering the material on record, directed the ACB Worli, Mumbai Region, to register an FIR under relevant provisions of the IPC, Prevention of Corruption Act, SEBI Act, and other applicable laws.
Reacting to the court order, the Sebi in a statement said, “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 the BSE.”
The application sought directions for the police to register an FIR and investigate into the alleged irregularities in granting listing permission to a company on the Bombay Stock Exchange in 1994, without complying with the provisions of the SEBI Act, 1992, SEBI (ICDR) Regulations, 2018, and the SEBI (LODR) Regulations, 2015, the statement said.
“Even though these officials were not holding their respective positions at the relevant point of time, the court allowed the application without issuing any notice or granting any opportunity to SEBI to place the facts on record,” it said.
“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 statement said.
In an official statement, the Bombay Stock Exchange said the ACB Court, Mumbai has allowed a miscellaneous application filed before them against certain SEBI officials and ex-chairman of BSE and the current MD &CEO.
The application had sought directions for registration of a FIR and investigations into alleged irregularities in the listing of Cals Refineries Ltd at BSE in 1994. The officials named in the application were not in their respective positions at the time of listing and were not connected with the company at all,” it said.
“The application is frivolous and vexatious in nature, the BSE said, adding it “is initiating necessary and appropriate legal steps in this regard”. The BSE remains committed to upholding regulatory compliance and ensuring transparency, it said.
India’s first woman Sebi chief Buch completed her three-year tenure Friday.
PTI