What are the charges levelled against the Securities and Exchange Board of India’s Chairperson by Hindenburg Research? What are the market regulator’s code of conduct guidelines? Do Madhavi Puri Buch’s actions constitute a potential conflict of interest? What lies ahead?
The story so far: Over a year and a half after U.S.-based Hindenburg Research alleged corporate malfeasance, stock price manipulation and breach of minimum public shareholding norms against the Adani Group of companies, the firm issued another report late last Saturday. It argued that India’s stock market regulator, the Securities and Exchange Board of India (SEBI), is reluctant to follow the trail on its charges about the use of offshore funds linked to “the Adani money siphoning scandal” because its own chairperson had a conflict of interest, having jointly invested in the same fund with her spouse.
SEBI Chairperson Madhabi Puri Buch and her husband, Dhaval Buch, in a statement last Sunday, said their investment in the fund flagged by Hindenburg was made during their stint as “private citizens” in Singapore, and almost two years before she joined as a SEBI member in 2017. This investment was spurred by Mr. Buch’s proximity to the fund’s Chief Investment Officer, Anil Ahuja, who was a “childhood friend”, and was redeemed in 2018 when Mr. Ahuja moved on from the role. They also cited a confirmation from Mr. Ahuja that the fund in question did not invest in any bond, equity or derivative of any Adani Group firm at any time. Mr. Ahuja was also a director of Adani Enterprises till 2017. On the U.S. firm’s charges that the SEBI chief owned two consulting firms, in Singapore and India, and transferred 100% of the Singapore outfit’s shares to her spouse in March 2022, the Buchs said these firms “became immediately dormant” on her appointment with SEBI. The transfer of the Singapore entity to Mr. Buch, who was said to have used both the entities since 2019 for his “own consultancy practice” with “prominent clients in the Indian industry”, was disclosed to SEBI as well as tax authorities in India.
Source: https://www.thehindu.com/business/Economy/why-is-sebi-credibility-under-a-cloud/article68537409.ece