Stock Fraud Case - Business Outrank

It was a major legal hear as a special Mumbai court has directed the Anti-Corruption Bureau (ACB) to register an FIR against former SEBI chairman Madhabi Puri Buch and five other officers in connection with charges of stock fraud and regulatory violations. The court said that it would monitor the investigation and required an update within the first 30 days. The case is based on a complaint by a journalist who reported what he thought was a major financial fraud, accompanied by regulatory failure and corruption. The complainant, for instance, accused Buch and the SEBI officers of approving the fraudulent listing of a company on the stock exchange without fulfilling the required SEBI norms provided for in the SEBI Act, 1992. The complaint further stated that this action led to market manipulation and facilitated corporate fraud, the latter having been made possible by regulatory bodies that did not fulfil their legal responsibilities. The court’s ruling shows that the allegations are rather severe and the offenses described are cognizable, which means that a police investigation is required. The order attributes the inaction to both the law enforcement agencies and SEBI, which necessitated the judicial interference. The court ordered the ACB, Worli division in Mumbai, to initiate an FIR under appropriate sections of the Indian Penal Code, Prevention of Corruption Act, SEBI Act and other related laws. The former chair of India’s securities board, Madhabi Puri Buch, stepped down recently, plagued by a number of scandals. Although Buch made important contributions to equity market reforms like reducing time for settlement and increasing disclosure of FPIs, the last year of her tenure was a struggle with political interference and controversies of conflict of interest. In 2024, the American activist hedge fund Hindenburg Research accused Buch of not acting on fraud and market manipulation claims against the Adani Group because of perceived conflicts of interest, including his family’s investments. Buch has defended herself, pointing out that all of her investments were declared at the time of her employment at SEBI and were made before she began serving on the board. This is a significant landmark in the fight against stock fraud and regulatory failure in India’s financial markets.

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