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 over alleged stock market fraud and regulatory lapses.
The order, issued by Special ACB Court Judge Shashikant Eknathrao Bangar on March 1, 2025, (Saturday), states that "there is prima facie evidence of regulatory lapses and collusion, necessitating a fair and impartial investigation."
The court will oversee the investigation and has instructed authorities to submit a status report within 30 days.
It also noted that the allegations indicate a cognisable offence, warranting an official inquiry.
The court’s intervention follows claims that law enforcement agencies and SEBI failed to act despite repeated complaints.
The case stems from a complaint filed by a journalist, who accused SEBI officials of facilitating financial fraud and regulatory violations.
According to the complainant, SEBI allegedly enabled the fraudulent listing of a company on the stock exchange despite its failure to meet the required regulatory standards under the SEBI Act, 1992.
The complaint further alleges that SEBI officials neglected their statutory duties, permitted market manipulation, and facilitated corporate fraud.
The complainant claimed that repeated appeals to law enforcement and regulatory bodies yielded no response, prompting the court’s intervention.
Given the gravity of the allegations, the court has directed the ACB’s Worli, Mumbai Region, to register an FIR under relevant provisions of the Indian Penal Code (IPC), the Prevention of Corruption Act, the SEBI Act, and other applicable laws.
Madhabi Puri Buch, India’s first female SEBI chief, completed her three-year tenure on February 28, 2025, (Friday).
Despite implementing key reforms such as faster equity settlements, enhanced foreign portfolio investor (FPI) disclosures, and expanded mutual fund participation, her tenure was overshadowed by controversy.
Buch faced scrutiny last year when the US-based short-seller Hindenburg Research accused her of a conflict of interest in handling fraud allegations against the Adani Group.
Hindenburg alleged that Buch and her husband, Dhaval Buch, had investments in offshore entities linked to Vinod Adani, the elder brother of Adani Group chairman Gautam Adani.
Although Buch denied the allegations, asserting that the investments were made prior to her SEBI appointment and were fully compliant with disclosure norms, the controversy triggered significant political and public backlash.
Additionally, she faced internal criticism, including allegations of a "toxic work culture" at SEBI, which led to employee protests.
Hindenburg Research, which played a key role in exposing allegations against both Adani and Buch, recently announced the closure of its operations.
The firm’s explosive reports caused market turmoil, leading to regulatory scrutiny of the Adani Group and renewed debates on SEBI’s handling of corporate fraud investigations.
With the ACB now mandated to conduct a formal investigation, the case could have far-reaching implications for SEBI’s credibility and India’s financial regulatory framework.
If substantiated, the allegations may expose significant failures in market oversight, highlighting the urgent need for stronger accountability measures within regulatory institutions.
For now, all attention remains on the ACB’s findings and whether this investigation will lead to further legal action against the accused officials.
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