SEBI Chairman’s response to Hindenburg raises new questions

Hindenburg Research in a post on X on 11th August said “Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch’s response to our report includes several important admissions and raises numerous new critical questions.”

Hindenburg Research stated that SEBI was tasked with investigating investment funds relating to the Adani matter, which would include funds Buch was personally invested in and funds by the same sponsor which were specifically highlighted in Hindenburg’s original report, citing a significant “conflict of interest” in the Sebi investigation into the Adani matter.

Hindenburg continued, “The Indian entity, still 99 per cent owned by the Sebi Chairperson, has generated Rs 23.985 million (US $312,000) in revenue (i.e. consulting) during the financial years ‘22, ‘23, and ‘24, while she was serving as Chairperson, per its financial statements.” 

Hindenburg had claimed in a report on Saturday that Buch “used her personal email to do business using her husband’s name while serving as a Whole-Time Member of Sebi,” displaying screenshots of purportedly personal emails from the Sebi director.

“What other investments or business has the Sebi Chairperson engaged in through her husband’s name while serving in an official capacity?” was the question that was brought up by the US short seller. 

The whistleblower questioned whether Buch would “publicly release the full list of consulting clients and details of the engagements, both through the offshore Singaporean consulting firm, the Indian consulting firm, and any other entity she or her husband may have an interest in?” in response to her statement, which was released on August 11th to refute Hindenburg’s allegations, and her pledge to “complete transparency.” 

SEBI and Buchs Refute Allegations 

On August 11, Buchs refuted claims made in the Adani Group case by Hindenburg Research.

Hindenburg Research questioned Sebi’s objectivity and expressed concerns on August 10th, alleging that Madhabi Puri Buch and her husband Dhaval had conflicts of interest because they invested in a fund that was purportedly used to artificially boost the price of Adani Group stock. The US short seller not only brought attention to the problems with using a foreign fund structure, but also charged the Indian securities regulator with favoring real estate investment trusts (Reits) because of Dhaval Buch’s connections to Blackstone, a major domestic real estate investor and private equity giant.

Separate statements were released by Sebi and the Buchs, denouncing all the accusations as unfounded and charging Hindenburg Research with character assassination. Legal professionals and industry players, such as AMFI, the trade association for mutual funds, endorsed the Buchs and cast doubt on the intentions of the US short-seller.

Some political parties criticized Madhabi Puri Buch and demanded that a joint parliamentary committee (JPC) look into the claims. She clarified that Blackstone was listed on the market regulator’s “recusal list,” suggesting that she was not involved in decisions that affected Blackstone.

In a new declaration, Buchs expanded details on their wealth, consultancy firms, affiliations, and holdings in the purported money Hindenburg had mentioned.

Source: Money Control