There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe, the special court judge said in the order passed on Saturday. The court said it will monitor the probe, and sought a status report of the case within 30 days
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A special court in Mumbai has directed 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 five other officials in connection with alleged stock market fraud and regulatory violations, news agency PTI reported.
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"There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe," said the special ACB court judge, Shashikant Eknathrao Bangar, in the order passed on Saturday.
The court also stated that it would monitor the investigation and requested a status report within 30 days, PTI reported.
The order of the Mumbai court further noted that the allegations disclosed a cognisable offence, which necessitates an investigation into the stock market 'fraud'.
It added that the inaction by law enforcement agencies and SEBI requires judicial intervention under the provisions of the CrPC (Criminal Procedure Code).
The complainant, a media reporter, had sought an investigation into the alleged offences committed by the proposed accused, involving large-scale financial fraud, regulatory violations, and corruption, PTI reported.
Stock market 'fraud': Complainant claims SEBI officials facilitated market manipulation
The allegations concern the fraudulent listing of a company on the stock exchange, with the active collusion of regulatory authorities, particularly SEBI, without compliance with the SEBI Act, 1992, and its associated rules and regulations.
The complainant claimed that SEBI officials failed in their statutory duties, facilitated market manipulation, and enabled corporate fraud by allowing the listing of a company that did not meet the prescribed norms.
Despite multiple attempts to approach the police station and relevant regulatory bodies, no action had been taken, the complainant added.
After considering the material on record, the court directed the ACB Worli, Mumbai Region, to register an FIR under the relevant provisions of the Indian Penal Code (IPC), Prevention of Corruption Act, SEBI Act, and other applicable laws.
Buch, India's first woman SEBI chief, who faced conflict of interest allegations by the US-based short-seller Hindenburg and subsequent political pressure, completed her three-year tenure on Friday.
While Buch made significant strides in areas such as faster settlements in equities, enhanced Foreign Portfolio Investment (FPI) disclosures, and increasing mutual fund penetration through the Rs 250 SIP (Systematic Investment Plans) scheme, the final year of her tenure was marked by heightened controversy. She faced a series of allegations from Hindenburg and the Congress party, while also dealing with internal protests against "toxic work culture" within SEBI.
In August last year, Buch faced pressure to resign after Hindenburg Research accused her of a conflict of interest that prevented a thorough investigation of manipulation and fraud claims related to the Adani Group.
Hindenburg accused Buch and her husband Dhaval of investing in offshore entities that were allegedly part of a fund structure in which Vinod Adani, the elder brother of Adani Group founder Gautam Adani, also had investments.
The Buchs have denied the allegations, stating that the investments were made before she joined the regulator and that she had complied with all disclosure requirements.
Hindenburg recently announced that it would be shutting down its business.
(With PTI inputs)
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