In a series of explosive allegations, US-based short-seller Hindenburg Research has implicated Madhabi Puri Buch, the Chairperson of the Securities and Exchange Board of India (SEBI), and her husband Dhaval Buch in the Adani scandal, raising questions about potential conflicts of interest within India’s financial regulatory body.

According to Hindenburg’s latest report, whistleblower documents reveal that both Madhabi and Dhaval Buch had stakes in obscure offshore funds allegedly used by the Adani Group to siphon money. These funds, based in jurisdictions like Bermuda and Mauritius, have been linked to Vinod Adani, the elder brother of Adani Group chairman Gautam Adani, and are suspected of being used to inflate stock prices through round-tripping operations.

The controversy deepens with revelations that Dhaval Buch had sought to be the sole person authorized to operate these offshore accounts shortly before Madhabi Buch’s appointment as a whole-time member of SEBI in 2017. This timing has been highlighted as particularly suspicious, given the significant regulatory changes benefiting private equity firms, such as Blackstone, where Dhaval Buch later served as a senior advisor.

SEBI has yet to respond comprehensively to these allegations, which if true, could severely undermine the integrity of its investigations into the Adani Group, particularly given the recent allegations of stock market manipulation and financial misconduct levelled against the conglomerate by Hindenburg in January 2023​.

This latest development has sparked a flurry of criticism from political figures, with Trinamool Congress MP Mahua Moitra and Shiv Sena leader Priyanka Chaturvedi expressing concern over the apparent lack of action from SEBI in light of these serious allegations. The report has also prompted calls for a thorough investigation to ensure the autonomy and transparency of India’s market regulator​.

As the market and political observers await further disclosures and responses from the involved parties, this case highlights the intricate and often opaque intersections of finance, regulation, and politics in one of the world’s largest economies.

What are the main allegations made by Hindenburg against SEBI’s Chairperson?

Hindenburg alleges that SEBI Chairperson Madhabi Puri Buch and her husband held stakes in offshore funds used by the Adani Group for siphoning funds, which may have influenced SEBI’s regulatory actions.

How has SEBI responded to Hindenburg’s allegations?

SEBI issued a show cause notice to Hindenburg, accusing it of making potentially misleading statements. Madhabi Puri Buch has also publicly denied the allegations, defending her financial transparency.

What has been the political reaction to the latest Hindenburg report?

The report has sparked significant political debate, with parties like Congress demanding a thorough investigation into the alleged conflicts of interest and calling for greater transparency in SEBI’s dealings with the Adani Group.

What are the possible implications of these allegations for the Adani Group and SEBI?

If proven, these allegations could lead to major changes in regulatory practices and personnel at SEBI. They could also affect the Adani Group’s market perception and operational freedom, potentially inviting more rigorous scrutiny and legal challenges.

Hindenburg Research’s History with Adani Group

Previous Hindenburg Disclosure on Adani In January 2023, Hindenburg Research made headlines with its scathing report on the Adani Group, one of India’s largest conglomerates. The report accused Adani Group of extensive financial irregularities, including stock market manipulation and accounting fraud. The allegations led to a significant drop in Adani stocks and triggered a market shock affecting not only the Adani Group but also broader Indian financial markets. Hindenburg cited numerous documents and public records to allege that the Adani Group had artificially inflated its share prices through opaque subsidiary operations and suspect financial practices.

Aftermath of the Allegations Following the allegations, there was intense scrutiny from various market watchers, investors, and regulatory bodies. The Adani Group vehemently denied the allegations, defending its financial practices and the integrity of its operations. This defense included detailed rebuttals and public statements aimed at restoring investor confidence. Meanwhile, regulatory bodies in India, including SEBI, were called upon to investigate the claims made by Hindenburg, leading to ongoing debates about regulatory oversight and market manipulation in India​.

About Hindenburg Research

Hindenburg Research is a US-based financial research firm that specializes in forensic financial research and short-selling. Named after the infamous 1937 Hindenburg airship disaster, the firm focuses on identifying accounting irregularities, fraud, and other signs of financial misconduct in publicly traded companies. Hindenburg Research gains from declines in stock prices by taking short positions based on its investigative reports, which often leads to significant media attention and market reactions. The firm’s methods and the impact of its reports have been both praised and criticized, reflecting the controversial nature of short-selling based on alleged corporate malfeasance.

This backdrop adds a layer of complexity to the current allegations involving SEBI’s chairperson, intertwining past controversies with present accusations and highlighting the ongoing challenges in corporate governance and financial regulation in global markets.

  Adani Group, financial scandal, Hindenburg, Madhabi Buch, market regulation, offshore funds, SEBI