Background
A Mumbai court has directed the registration of an FIR against former SEBI chairperson Madhabi Puri Buch over alleged misconduct during her tenure. The order came in response to a complaint accusing her of misusing her position while handling regulatory matters. The Securities and Exchange Board of India (SEBI) has announced its intention to challenge the order.
Court’s Rationale
- Prima Facie Case for Investigation
- The court observed that the allegations raised serious concerns that warranted an inquiry.
- It directed the police to register an FIR and conduct a thorough probe.
- Misuse of Regulatory Authority
- The complaint alleged that Buch engaged in regulatory overreach or selectively enforced rules, leading to financial repercussions for certain stakeholders.
- The court held that such allegations, if substantiated, could amount to abuse of power.
- Judicial Oversight Over Regulatory Actions
- The ruling highlights the judiciary’s role in ensuring regulatory bodies operate within legal frameworks.
- It signals that actions by financial regulators can be subject to legal scrutiny.
Existing Measures
- SEBI Act, 1992: Governs the powers and responsibilities of the market regulator.
- Judicial Review of SEBI Orders: Courts have the authority to examine SEBI’s decisions when challenged.
- Whistleblower Protections and Corporate Governance Norms: Ensure transparency and accountability in financial regulation.
Conclusion
SEBI has stated that it will appeal against the court’s order, arguing that regulatory actions were taken within its mandate. The case is likely to set a precedent regarding judicial intervention in financial regulatory decisions and could impact how SEBI operates under future leadership.