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, as well as Bombay Stock Exchange (BSE) Chairman Pramod Agarwal and CEO Sundararaman Ramamurthy in a case related to alleged stock market fraud and regulatory violations.
The order was issued by Special Judge SE Bangar on a petition filed by a RTI-journalist. The complaint accuses Sebi officials of facilitating market manipulation and enabling corporate fraud by allowing the listing of Cals Refineries, which got liquidated in 2019.
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Responding to the order, Sebi said that it will challenge it. “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,” the statement said.
“The applicant (Sapan Shrivastava, an RTI journalist) is known to be a frivolous and habitual litigant, with previous applications being dismissed by the Court, with imposition of costs in some cases,” it said.
The market regulator also added that it plans to initiate appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters.
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Shrivastava had alleged that the regulator permitted the listing of Cals Refineries despite its failure to comply with regulatory norms and that the accused persons are engaged in round-tipping, insider trading, and price manipulation. It also alleged that company’s promoters siphoned off public funds post listing and the regulator failed to take preventive measures.
The court order of SE Bangar observed that the allegations disclose a cognizable offence, necessitating investigation and there is evidence of regulatory lapses and collusion. In its order, it said, that considering the gravity of allegations, applicable laws, and settled legal precedents, this Court deems it appropriate to direct an investigation under Section 156(3) Cr.P.C, which allows the magistrate to order police investigation into a cognizable offence.
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