Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India (Sebi), made the investments mentioned in the Hindenburg report before 2017 in a private capacity and these had been disclosed, according to people with knowledge of the matter.
Early on Sunday, Buch said that these were “baseless allegations” and devoid of any truth, underscoring this point.
“All disclosures as required have already been furnished to Sebi over the years,” the Sebi chairperson said, adding that a detailed statement would be issued in due course.
‘Character assassination’
“It is unfortunate that Hindenburg Research against whom Sebi has taken an enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same,” she added.Hindenburg’s argument would seem to suggest that private individuals can be penalised for investment decisions made decades ago if they subsequently went on to hold public positions, said one of the persons cited above. “Such a precedent would have a chilling effect on private sector talent ever taking public positions to serve the nation,” the person added.
US-based short seller Hindenburg Research alleged late on Saturday that Buch and husband Dhaval Buch had investments in obscure offshore entities linked to the Adani Group that were the subject of a Sebi investigation, alleging conflict of interest.
In its report released on Saturday, citing whistleblower documents, Hindenburg said that the couple had investments in IPE Plus Fund, a small offshore fund based in Mauritius, set up by a fund manager who also served as a director on the board of Adani Enterprises.
The report further said that Vinod Adani, the brother of Gautam Adani, used this structure to invest in Indian markets with funds allegedly siphoned from over-invoicing of power equipment to the Adani Group, an allegation that was part of the original Hindenberg report released last year.
Shares of Adani companies crashed after Hindenburg issued a report on January 25, 2023, alleging accounting fraud and stock price manipulation within the group. The Adani Group has rejected the allegations and its stocks have recouped their losses since then.
‘No concrete evidence’
Sources in the government said that the report offers no concrete evidence against the Sebi chairperson and is another attempt to attack the country’s growth story using conjecture and barely related events.
“The report attempts to trigger panic among retail and institutional shareholders,” said another person, adding that the recovery in Adani Group shares suggests the short-seller group has no credibility.
“We suspect Sebi’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from chairperson Madhabi Buch’s complicity in using the same funds used by Vinod Adani, brother of Gautam Adani,” the report by Hindenburg had alleged.
