Mumbai Court Orders FIR Against Former SEBI Chief Madhabi Puri and Officials Over Alleged Stock Market Fraud

A special court in Mumbai has directed the Anti-Corruption Bureau (ACB) to file a First Information Report (FIR) against former Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch and five other SEBI officials in connection with alleged stock market fraud and regulatory breaches. The court, in its ruling on Saturday, pointed to prima facie evidence of regulatory lapses and possible collusion, warranting an unbiased investigation. Judge Shashikant Eknathrao Bangar, who issued the order, emphasized the need for the probe, adding that the court would closely monitor the investigation and expects a status report within the next 30 days. The judge also highlighted that the failure of law enforcement agencies and SEBI to take action required judicial intervention under the Criminal Procedure Code (CrPC).

The case was initiated by a media reporter who sought an inquiry into alleged offenses involving large-scale financial fraud, regulatory violations, and corruption. Buch, who became India's first female SEBI chief, had completed her three-year tenure on Friday amidst controversy. Her leadership saw efforts like faster equity settlements, increased Foreign Portfolio Investment (FPI) disclosures, and enhanced mutual fund penetration.

However, the final year of her tenure was marred by conflict-of-interest allegations from the US-based short-seller Hindenburg, political pressure from the Congress party, and internal protests over a reported "toxic work culture" within SEBI. The court's ruling acknowledged that the allegations pointed to a cognizable offense, requiring further investigation into the alleged stock market fraud.