COURT ORDERS FIR AGAINST EX-SEBI CHIEF & BSE OFFICIALS OVER REGULATORY LAPSES:

A Special Court in Mumbai, on Saturday, directed the Anti-Corruption Bureau (ACB), Mumbai, to register a First Information Report (FIR) against former Securities and Exchange Board of India (SEBI) chairperson, Madhabi Puri Buch, along with three of SEBI’s Whole-Time Members and senior officials of the Bombay Stock Exchange (BSE).

The order was issued by the Special Judge presiding over cases under the Prevention of Corruption Act in response to an application filed under Section 156(3) of the Criminal Procedure Code (Cr.P.C.), which empowers courts to direct law enforcement agencies to investigate allegations of cognizable offenses.

Special Judge S. E. Bangar, while presiding over a hearing on an application filed by Sapan Shrivastava, a 47-year-old journalist, observed that the complaint prima facie discloses the commission of a "cognizable offence." Consequently, the court directed the Anti-Corruption Bureau (ACB) to register a First Information Report (FIR) under the relevant provisions of the Indian Penal Code (IPC), the Prevention of Corruption (PC) Act, and the SEBI Act. The court also instructed the ACB to conduct a thorough investigation and submit a detailed probe report within 30 days.

The order mandates an inquiry into the alleged offenses committed by Madhabi Puri Buch, former Chairperson of SEBI, along with SEBI’s Whole-Time Members—Ashwani Bhatia, Anant Narayan G., and Kamlesh Varshney. Additionally, the probe extends to senior officials of the Bombay Stock Exchange (BSE), including Sundararaman Ramamurthy, the Director of BSE, and Pramod Agarwal, the Public Interest Director of the BSE.

The judge emphasized that the decision to order an investigation under Section 156(3) of the Criminal Procedure Code (Cr.P.C.) was based on the seriousness of the allegations presented in the complaint. Acknowledging the "gravity of the offence," the court deemed it necessary to direct the Anti-Corruption Bureau (ACB) to initiate a formal probe to ensure a thorough examination of the alleged misconduct. This step underscores the court’s commitment to upholding the rule of law and addressing potential regulatory lapses within key financial institutions.

"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 observed.

In his complaint, Sapan Shrivastava alleged that Madhabi Puri Buch, in collusion with other SEBI and BSE officials, enabled the "fraudulent" listing of a company on the stock exchange and deliberately failed to take action against the company for its alleged misconduct. 

Shrivastava stated that he and his family had invested in shares of Cals Refineries Ltd on December 13, 1994, when it was listed on the Bombay Stock Exchange (BSE). However, he claimed to have suffered substantial financial losses. According to him, SEBI and BSE officials not only neglected to take action against the company’s alleged violations but also wrongfully approved its listing, disregarding legal provisions and failing to safeguard investor interests. 

The complaint further accused SEBI and BSE officials of market manipulation, alleging that they actively facilitated corporate fraud by permitting the unlawful listing of the company, thereby compromising the integrity of the stock market.