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A special court in Mumbai has directed the Anti-Corruption Bureau (ACB) to register an FIR against former SEBI Chairperson Madhabi Puri Buch and five other officials over alleged stock market fraud and regulatory violations.

The order, issued by Special ACB Court Judge Shashikant Eknathrao Bangar on Saturday, states that there is prima facie evidence of regulatory lapses and collusion, necessitating a fair and impartial investigation. The court will monitor the probe and has sought a status report within 30 days.

Who Are the Officials Named in the FIR?

Apart from Madhabi Puri Buch, the FIR has been ordered against:

  • Sundararaman Ramamurthy – Managing Director & CEO of Bombay Stock Exchange (BSE)
  • Pramod Agarwal – Former BSE Chairman & Public Interest Director
  • Ashwani Bhatia – Whole-Time Member, SEBI
  • Ananth Narayan G – Whole-Time Member, SEBI
  • Kamlesh Chandra Varshney – Whole-Time Member, SEBI

Why Is SEBI Under Investigation?

The allegations stem from irregularities in granting listing permission to a company on the Bombay Stock Exchange (BSE) in 1994.

  • The complaint was filed by Sapan Shrivastava (47), a media reporter, who alleged that:
    • SEBI officials failed in their statutory duties.
    • They facilitated market manipulation and enabled corporate fraud.
    • A company was fraudulently listed without meeting the required compliance under the SEBI Act, 1992.

Key Allegations:
Regulatory lapses in approving an IPO.
Insider trading, price manipulation, and round-tripping.
Whistleblower evidence suggesting undue favor to a company.
Artificial inflation of share prices to mislead investors.

Shrivastava claimed that despite repeated complaints to police and regulatory bodies, no action was taken, forcing him to seek judicial intervention.

SEBI & BSE Respond, Call Allegations "Frivolous"

SEBI’s Reaction:

  • SEBI stated it would challenge the order legally.
  • It pointed out that the accused officials were not in their respective positions in 1994 when the listing was granted.
  • SEBI accused the complainant of being a "habitual litigant", noting that his previous cases had been dismissed with penalties.

BSE’s Response:

  • BSE also dismissed the allegations, calling the application "frivolous and vexatious".
  • It asserted that the accused were not connected with the company at the time of the alleged fraud.

What Happens Next?

ACB Mumbai has been directed to register an FIR under the:

  • Indian Penal Code (IPC)
  • Prevention of Corruption Act
  • SEBI Act & related regulations

Next Steps:

  • ACB to submit a status report within 30 days.
  • SEBI and BSE are expected to challenge the order legally.
  • Investigation to determine the extent of fraud and regulatory lapses.

This case has drawn major attention, especially since Madhabi Puri Buch, India’s first woman SEBI chief, completed her tenure just a day before the order.

Will the investigation expose deeper regulatory failures?
Will SEBI and BSE succeed in overturning the order?

The coming weeks will reveal the impact of this high-profile financial scandal.

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