The Securities and Exchange Board of India (SEBI) announced on March 2, 2025, its plans to legally challenge the special Anti-Corruption court's directive to file a First Information Report (FIR) against its former chairperson, Madhabi Puri Buch, and several other officials for alleged stock market fraud and regulatory violations.
On March 1, the court, presided over by Special Judge Shashikant Eknathrao Bangar, ordered the registration of the FIR based on a complaint filed by journalist Sapan Shrivastava. The allegations centered on serious financial misconduct linked to the stock exchange listing of Cals Refineries, with claims of non-compliance with various regulations governing market conduct.
SEBI's response to the court order was swift. A statement from the regulatory body labeled the complainant as "a frivolous and habitual litigant" and asserted its commitment to challenging the court's decision. "The applicant is known to be a frivolous and habitual litigant, with previous applications being dismissed by the Court, with imposition of costs in some cases," SEBI articulated. The regulator emphasized the need for due process and fairness, noting, "Even though these officials were not holding their respective positions at the relevant point of time, the court allowed the application without issuing any notice or granting any opportunity to SEBI to place the facts on record."
Judge Bangar's ruling indicated considerable concern, stating, "There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe." This lays the groundwork for judicial scrutiny over the actions of former officials when Cals Refineries was granted listing permission back in 1994, which has now become contentious.
Madhabi Puri Buch, having served as India's first woman chair of SEBI until her tenure ended on February 28, 2025, has faced intense scrutiny. Notably, her leadership was marked by significant initiatives such as streamlining equity settlements and increasing mutual fund access through Small Investment Plans (SIPs). Nonetheless, as the September 2024 accusations from US-based short-seller Hindenburg Research suggested conflicts of interest, Buch's tenure culminated under mounting pressure. She consistently denied any wrongdoing, asserting the allegations of conflict emerged from investments she claimed were made before her appointment to SEBI. This backdrop of controversy adds layers to the current legal predicament.
The allegations brought about by Shrivastava assert not only individual complicity but also question the regulatory frameworks SEBI operated under during its evaluations. The complainant argues there has been consistent failure by SEBI officials to uphold statutory duties, allowing for market manipulation and corporate fraud, especially concerning the contentious listing of Cals Refineries.
Following the issuance of the FIR, the judge instructed the Mumbai Anti-Corruption Bureau to conduct prompt investigations under provisions of the Indian Penal Code, the Prevention of Corruption Act, as well as the SEBI Act. The court has specified it will track the progress of these investigations closely, manditating status reports within forthcoming weeks to review developments.
SEBI maintains it has acted within legal boundaries and has expressed confidence in contesting these allegations. The body emphasized its adherence to regulatory compliance standards and committed to transparently addressing both the allegations and the accompanying administrative processes moving forward.
The developments surrounding the case against Madhabi Puri Buch and her colleagues have sparked discussions across the financial and regulatory sectors, raising questions about governance, accountability, and the ethical dimensions of market regulation. It remains to be seen how the judicial scrutiny will shape not only the futures of those implicated but also the mechanics of regulatory enforcement at SEBI.
SEBI's response serves as both a defense of its officials and as a broader commentary on the challenges faced by regulatory bodies amid claims of misconduct. The agency's commitment to uphold regulatory integrity will be tested as the judicial process unveils the nuances of this high-stakes case.