A few hours ago, Hindenburg Research, the U.S.-based short seller, raised new allegations involving Madhabi Puri Buch, the Chairperson of India’s Securities and Exchange Board of India (SEBI). The allegations suggest potential conflicts of interest and connections between Buch, her spouse, and offshore funds linked to the Adani Group.
This report has reignited debates about the regulatory oversight of SEBI and the ongoing scrutiny of the Adani Group’s financial dealings.
Follow-up of the 2023 Short Squeeze?
Hindenburg Research first made headlines in early 2023 with accusations against the Adani Group, alleging stock price manipulation and financial misconduct. Despite ongoing investigations, including those by SEBI, these claims have remained controversial. The latest allegations by Hindenburg add a new dimension to the scrutiny of SEBI’s handling of the Adani case.
Some New Info in the Limelight
According to Hindenburg Research, documents from a whistleblower indicate that SEBI Chairperson Madhabi Puri Buch and her husband, Dhaval Buch, had significant investments in offshore entities based in Bermuda and Mauritius. The report claims that weeks before Buch’s appointment to SEBI in 2017, Dhaval Buch arranged for himself to be the sole authorized operator of accounts related to these offshore funds.
The short seller’s report includes an account statement dated February 26, 2018, allegedly sent to Madhabi Puri Buch’s private email. This document purportedly shows their stake in a fund named “GDOF Cell 90 (IPEplus Fund 1)” under the “Global Dynamic Opportunities Fund Ltd.”, managed by IIFL Global, valued at over $872,000. The statement reportedly highlights a transaction where Dhaval Buch sought to redeem the entire investment.
Hindenburg further asserts that this fund’s structure is similar to one reportedly used by Vinod Adani, a brother of Gautam Adani, in the alleged Adani money siphoning scandal. The short seller suggests that SEBI’s reluctance to delve deeper into these connections may stem from a potential conflict of interest involving its own chairperson.
Madhabi and Dhaval Buch Responds
In response to these allegations, both Madhabi Puri Buch and Dhaval Buch have denied any wrongdoing. They dismissed the claims as “baseless” and “without merit,” accusing Hindenburg of attempting to discredit them. They argue that Hindenburg’s allegations are a reaction to SEBI’s enforcement actions against the firm.
SEBI has not yet taken any public action regarding the new allegations, and the regulator’s stance has been one of denial. The ongoing investigation into the Adani Group remains a point of contention, with critics questioning SEBI’s objectivity and effectiveness in addressing potential conflicts of interest.
Beyond the offshore funds, Hindenburg Research has also flagged other potential conflicts. The report suggests that Madhabi Puri Buch previously held a 100% interest in Agora Partners, a Singaporean consulting firm, until March 2022.
Dhaval Buch allegedly took over the holdings at that time. Additionally, the report highlights Dhaval Buch’s recent role as a senior advisor at Blackstone, a global private equity firm with significant investments in India and involvement in real estate investment trusts (REITs) that Buch has advocated for during her tenure at SEBI.
Hindenburg claims that these links suggest a potential conflict of interest, as Buch’s public endorsements of REITs might benefit Blackstone financially. Furthermore, Hindenburg alleges that Agora Advisory, an Indian firm where Buch holds a substantial stake, generated significant revenue from consulting services, surpassing Buch’s disclosed salary at SEBI.
The new allegations have sparked a heated debate on social media and political forums.
The Congress party has called for a Joint Parliamentary Committee investigation into the matter, urging the government to address potential conflicts of interest within SEBI’s oversight of the Adani Group. The political discourse underscores the broader implications of these allegations on regulatory practices and transparency in India’s financial sector.
Hindenburg Research’s latest report has intensified scrutiny of SEBI and its chairperson, Madhabi Puri Buch. While SEBI and Buch have firmly rejected the allegations, the revelations have heightened calls for greater transparency and accountability in regulatory investigations.
