SEBI To Challenge Court Order Of FIR Against Ex-Chief Madhabi Puri Buch

Mumbai: The Securities and Exchange Board of India (SEBI) has announced to initiate legal proceedings to challenge a recent court order directing the filing of an FIR against former chairperson Madhabi Puri Buch and other officials. The order, issued by a special Anti-Corruption (ACB) court, pertains to alleged stock market fraud and regulatory violations. In a statement released on Sunday, SEBI disparaged the complainant, labelling them a “frivolous and habitual litigant”. The regulator pointed out that the complainant's previous applications had been dismissed by the court, with costs imposed in some instances. 

The SEBI, while announcing its intention to challenge the court's order, asserted its commitment to ensuring regulatory compliance in all matters and vowed to take appropriate legal steps to challenge the order. 

The SEBI reiterated its dedication to upholding regulatory standards, asserting that it would not hesitate to take necessary actions to protect the integrity of the capital markets. The regulator's stance is consistent with its mandate to safeguard investor interests and maintain market stability.

The court's directive to file an FIR against Madhabi Puri Buch and other officials has huge implications for SEBI and the capital markets. An official stated that the regulator's decision to challenge the order showcases its commitment to defending its officials and upholding the integrity of the regulatory process.

As per reports, the SEBI is expected to initiate legal proceedings to contest the court order in the coming days. The regulator's actions will be closely watched by market participants and observers, who will be keen to see how the situation unfolds.

Earlier, a special court in Mumbai instructed the ACB to lodge an FIR against former SEBI chairperson Madhabi Puri Buch and five others. In addition to the former SEBI chief, the court also ordered the registration of a case against the Bombay Stock Exchange (BSE). The directive follows allegations of stock market fraud, regulatory violations, and corruption labelled against the former SEBI chairperson, three SEBI whole-time members, and BSE Chairman Pramod Agarwal and CEO Sundararaman Ramamurthy.

The court's ruling was triggered by a petition submitted by a local journalist, seeking an investigation into the alleged offenses committed by Madhabi Buch and others. The petition alleged that SEBI officials permitted the listing of a company that failed to meet regulatory norms, resulting in market manipulation and investor losses. Furthermore, the petition claimed collusion between SEBI and corporate entities, insider trading, and the siphoning of public funds post-listing.

Court Observes Prima Facie Evidence of Regulatory Lapses

The court held that the allegations disclose a cognizable offense, necessitating an investigation. Special Judge SE Bangar observed that there is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe. The court also noted that the inaction by law enforcement and SEBI necessitates judicial intervention under Section 156(3) of the Code of Criminal Procedure (CrPC).

The court has directed the ACB to register an FIR against the accused individuals and conduct a thorough investigation into the allegations. The ACB will be responsible for probing the alleged offenses and gathering evidence to support the charges.

SEBI and BSE Officials Under Scrutiny

The court's order has brought SEBI and BSE officials under scrutiny, with allegations of regulatory lapses and collusion with corporate entities. The investigation will examine the role of SEBI officials in permitting the listing of a company that failed to meet regulatory norms, as well as allegations of insider trading and the siphoning of public funds.

The investigation will be conducted under the supervision of the special court, ensuring that the probe is fair, impartial, and thorough. The court will monitor the progress of the investigation and ensure that the accused are held accountable for their actions.