Mumbai (Maharashtra): A Mumbai special court has ordered the launching of an FIR against former SEBI Chairperson Madhabi Puri Buch and five others over alleged financial fraud, regulatory violations, and corruption, a court order showed.
An application was filed before the Special ACB Court in Mumbai by the complainant- Sapan Shrivastava, a Thane-based legal news reporter- seeking directions to the concerned police station for the registration of an FIR and investigation into alleged offenses committed by the accused, which includes Buch.
The complainant alleged a large-scale financial fraud, regulatory violations, and corruption.
The allegations pertain to an alleged fraudulent listing of a company on the stock exchange. It was alleged that the fraudulent activity was done with the active connivance of regulatory authorities.
The complainant contended that SEBI officials failed in their statutory duty. They facilitated market manipulation and enabled corporate fraud by allowing the listing of a company that did not meet the prescribed norms.
The complainant submitted before the Court that despite the complainant having approached the concerned police station and regulatory bodies on multiple occasions, no action was taken, necessitating judicial intervention.
The Court, while ordering for the launch of FIR, noted that the complainant has placed on record substantial material to support the allegations, including written complaints lodged with SEBI, the police, and other authorities, with their acknowledgments; documents revealing procedural lapses and noncompliance in the IPO process, leading to an irregular listing of the company; regulatory filings and stock market reports indicating artificial inflation of share prices and market manipulation; correspondence from whistleblowers within SEBI, indicating undue favoritism towards the accused company; among others.
The complainant specifically alleged that the SEBI permitted the listing of the accused company despite its alleged failure to comply with essential regulatory norms, including disclosure requirements and due diligence procedures mandated under the rules.
Also, the complainant alleged that the accused persons engaged in round-tripping, insider trading, and price manipulation and misled investors into believing the company was financially sound.
Upon reviewing the material on record, the Court noted that the allegations disclose a cognizable offense and, hence, necessitate an investigation.
“There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe. The inaction by law enforcement and SEBI necessitates judicial intervention under Section 156(3) CrPC,” the court document read.
In that context, the court has directed the Anti Corruption Bureau, Worli, Mumbai Region, Mumbai, to register an FIR under the relevant provisions of the IPC, Prevention of Corruption Act, SEBI Act, and other applicable laws.
The Court would monitor the investigation. The Court also ordered that a status report be submitted within 30 days.
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Ms. Madhabi Puri Buch and her husband – both stand accused of fraud running into millions of dollars. There has been credible allegations of “conflict of interest” as well as “quid pro quo” corruption.
The investigative agencies should look into these allegations with utmost seriousness. The nation deserves to know the truth.