Mumbai court directs filing of FIR against ex-SEBI chief Madhabi Puri Buch and others

A recent development in Mumbai has seen a special court issuing orders to launch an FIR against former SEBI Chairperson Madhabi Puri Buch and five others for suspected financial fraud, regulatory breaches, and corruption, as detailed in a court order. The plea was submitted to the Special ACB Court in Mumbai by Sapan Shrivastava, a legal news reporter from Thane, pressing for the registration of an FIR and an investigation into the alleged misconduct of the accused individuals, including Buch.

The accusations revolve around claims of a widespread financial scam, violations of regulatory protocols, and corrupt practices. The focal point of the allegations is on the purported deceitful listing of a company on the stock exchange, which allegedly led to market manipulation and corporate deceit by allowing the entry of a company that did not meet the required standards.

According to the complainant, despite making numerous attempts to bring the discrepancies to the attention of the relevant authorities, including the police and regulatory bodies, no action was taken, prompting the need for judicial intervention. The Court, in its ruling to initiate the FIR, acknowledged the extensive evidence provided by the complainant, which included formal complaints lodged with SEBI, the police, and other entities, documenting procedural irregularities and noncompliance in the IPO process that resulted in the irregular listing of the company, alongside regulatory filings and market reports indicating artificial inflation of share prices and market manipulation, as well as internal whistleblowers’ communications highlighting preferential treatment towards the accused company.

Moreover, the complainant alleged that SEBI had granted approval for the company’s listing despite it failing to adhere to mandatory regulatory requirements, such as disclosure obligations and due diligence procedures mandated by the rules. Additionally, the accused were accused of involvement in practices like round-tripping, insider trading, and price manipulation, deceiving investors into believing in the financial stability of the company. Following a detailed review of the provided evidence, the Court determined that the claims raised indicated the occurrence of a punishable offense, warranting a thorough investigation.

Recognizing the regulatory oversights and potential collusion, the Court emphasized the need for a fair and unbiased inquiry into the matter due to the apparent inaction on the part of law enforcement agencies and SEBI. As a result, the court directed the Anti Corruption Bureau in Worli, Mumbai to register an FIR under the relevant legal provisions, including the IPC, Prevention of Corruption Act, SEBI Act, and other applicable statutes with the court overseeing the investigative process. It was also mandated that a progress report be submitted within a month to keep track of the developments in the case.