Stock Market Scam: What Are the Charges Against Ex-SEBI Head Madhabi Puri Buch?

⚖️ Stock market scam: Charges against ex-SEBI head Madhabi Puri Buch

A special anti-corruption court in Mumbai has ordered the registration of a First Information Report (FIR) against top officials of the Securities and Exchange Board of India (SEBI), including former Chairperson Madhabi Puri Buch, whole-time members Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney. Additionally, Bombay Stock Exchange (BSE) Chairman Pramod Agarwal and CEO Sundararaman Ramamurthy have also been named in the alleged stock market fraud and regulatory violation case.

📌 Court order and allegations

• The case was filed based on a petition by RTI journalist Sapan Shrivastava.
• The allegations claim that SEBI officials facilitated market manipulation and corporate fraud by allowing the listing of Cals Refineries, which was liquidated in 2019.
• The special judge SE Bangar found the allegations serious enough to warrant an investigation under Section 156(3) of Cr.P.C, allowing a magistrate to order a police investigation.
• The case revolves around accusations of round-tripping, insider trading, and price manipulation.

📉 SEBI's response to the allegations

Following the court’s order, SEBI strongly opposed the accusations and announced that it will challenge the FIR. In an official statement, SEBI clarified:

• The officials named in the case were not in their respective positions when the alleged violations occurred.
• The court passed the order without allowing SEBI to present its case or respond to the allegations.
• SEBI described Sapan Shrivastava as a “habitual litigant” whose previous legal petitions have been dismissed, sometimes with imposed costs.

💰 Cals Refineries and stock market fraud

The accusations focus on the alleged manipulation of Cals Refineries’ stock. Key points include:

• The company’s promoters allegedly siphoned off public funds after listing.
• Despite non-compliance with regulatory norms, SEBI permitted its listing.
• The stock price saw abnormal movements, rising from ₹0.07 to ₹0.29 in 2016, delivering 314.2% returns to investors.
• In 2021, SEBI imposed a fine of nearly ₹17 crore on Cals Refineries, its officials, and another entity for manipulation in the issuance of global depository receipts (GDRs).

🔎 Legal consequences and ongoing investigation

The court noted that the evidence suggests regulatory lapses and collusion, making a full-fledged investigation necessary. SEBI officials and BSE executives may face legal action if the investigation proves gross negligence or corruption.

📢 What’s next?

• SEBI and BSE plan to legally challenge the FIR.
• Authorities will investigate the alleged insider trading, price manipulation, and corporate fraud.
• If found guilty, those involved could face severe financial penalties and potential criminal charges.

Stay updated on this developing story as further legal proceedings unfold.