Court Orders FIR Against Ex-SEBI Chief Madhabi Puri Buch & BSE Officials
A special court in Mumbai has ordered 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 several other officials, including those from the Bombay Stock Exchange (BSE). The order was made in response to allegations of stock market fraud and regulatory violations.
Allegations: The complaint, filed by journalist Sapan Shrivastava, alleges that SEBI and BSE officials were involved in the fraudulent listing of a company on the stock exchange, specifically Cals Refineries Ltd in 1994. It claims that these officials facilitated market manipulation and corporate fraud by allowing the listing despite non-compliance with regulatory norms.
Respondents: The FIR names Madhabi Puri Buch, three SEBI whole-time members (Ashwani Bhatia, Anant Narayan G, and Kamlesh Chandra Varshney), and BSE officials Pramod Agarwal and Sundararaman Ramamurthy.
Court Ruling: The court found prima facie evidence of regulatory lapses and collusion, necessitating a fair and impartial investigation. It directed the ACB to register the FIR under relevant laws, including the Indian Penal Code, Prevention of Corruption Act, and SEBI Act.
SEBI’s Response: SEBI has termed the court order “unprecedented” and plans to challenge it, stating that the accused officials were not in their positions at the time of the alleged irregularities.
Investigation Monitoring: The court will monitor the investigation and has requested a status report within 30 days.
This case highlights significant concerns about regulatory oversight and potential corruption within India’s financial markets.
The specific allegations made against Madhabi Puri Buch and other officials include:
Stock Market Fraud and Regulatory Violations: The complaint alleges that SEBI officials, including Madhabi Puri Buch, failed in their statutory duty by allowing the listing of a company that did not meet regulatory norms. This facilitated market manipulation and corporate fraud.
Collusion and Insider Trading: There are claims of collusion between SEBI and corporate entities, as well as insider trading and siphoning of public funds post-listing.
Conflict of Interest Allegations: Madhabi Puri Buch faced allegations by Hindenburg Research regarding undisclosed investments in offshore entities linked to the Adani Group. These investments were purportedly made before her tenure at SEBI but were not disclosed during her regulatory role, raising concerns about potential conflicts of interest in SEBI’s investigations into the Adani Group.
Toxic Work Culture: There were also reports of a “toxic work culture” during her tenure, with some staff expressing dissatisfaction with the functioning of top management.
Undisclosed Financial Dealings: Questions were raised about the transparency of her financial dealings, particularly regarding a Singaporean consulting firm, Agora Partners, which she owned and later transferred to her husband.
