Mumbai Court Directs FIR Against Former SEBI Chief Madhabi Puri Buch

A special Anti-Corruption Bureau (ACB) court in Mumbai has ordered the registration of a First Information Report (FIR) against former Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch and five other officials, citing alleged stock market fraud and regulatory violations. The directive stems from a complaint filed by a journalist alleging that SEBI officials facilitated the fraudulent listing of a company, resulting in significant financial misconduct and investor harm.

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In an order issued on Saturday, Special Judge Shashikant Eknathrao Bangar stated that there was prima facie evidence of regulatory lapses and collusion, mandating a fair and impartial investigation. The court has directed the Anti-Corruption Bureau, Mumbai Region, to file an FIR under the relevant sections of the Indian Penal Code (IPC), the Prevention of Corruption Act, the SEBI Act, and other applicable laws. The court has also decided to oversee the investigation and has asked for a status report within 30 days.

The complainant, a media reporter, has alleged large-scale financial fraud, regulatory violations, and corruption in connection with the fraudulent listing of a company on the stock exchange. According to the complaint, SEBI officials neglected their statutory responsibilities, thereby enabling market manipulation and corporate fraud. Despite multiple appeals to law enforcement agencies and regulatory bodies, no action was taken, which ultimately led to judicial intervention. The court noted that the allegations indicated a cognizable offense that required immediate investigation.

SEBI's Response

In response to the court order, SEBI has announced its intention to challenge the directive, arguing that the investigation was initiated without giving SEBI officials an opportunity to present their case. SEBI has termed the allegations as "frivolous and vexatious," reaffirming its commitment to regulatory compliance and the integrity of the securities market. The regulatory body has expressed concerns that such actions could undermine market confidence and hinder effective regulation.

A SEBI spokesperson stated that the agency has always functioned within the framework of the law and has taken strict measures against market manipulation. SEBI also emphasized that it has a robust surveillance mechanism in place to detect and prevent fraudulent activities in the securities market.

Previous Allegations Against SEBI Officials

This development adds to the scrutiny faced by SEBI and its officials in recent years. In August 2024, Hindenburg Research accused Buch and her husband of holding undisclosed stakes in offshore entities linked to the Adani Group, raising concerns about potential conflicts of interest in SEBI's investigations. Both Buch and the Adani Group denied these allegations, dismissing them as baseless and malicious.

Additionally, in September 2024, the Indian National Congress accused Buch of receiving rental income from a company under SEBI investigation, further intensifying calls for an independent inquiry. Congress leaders claimed that the alleged conflict of interest compromised SEBI’s ability to act impartially in market-related cases.

Impact on Indian Markets

The controversy surrounding SEBI’s regulatory actions has sparked concerns among investors and market participants. Analysts believe that such legal battles could impact investor confidence, especially among foreign institutional investors who rely on SEBI's oversight for market transparency.

Despite these controversies, Buch has maintained that she adhered to regulatory guidelines and denied any misconduct during her tenure. Her term as SEBI chairperson ended on February 28, 2025, and Finance Secretary Tuhin Kanta Pandey has been appointed as her successor. Pandey is expected to take charge amid rising concerns about regulatory transparency and market governance.

As the case unfolds, it remains to be seen how the investigation will impact SEBI’s credibility and its approach to future regulatory enforcement.