SEBI Chairperson Madhabi Puri Buch faces fresh allegations of potential rules violation over consultancy earnings

Madhabi Puri Buch, Chairperson of the Securities and Exchange Board of India (SEBI), is under scrutiny following allegations that she may have breached regulatory rules by continuing to earn revenue from a consultancy firm during her tenure. Documents reviewed by Reuters reveal that Agora Advisory Private Limited, in which Madhabi Puri Buch holds a 99% stake, generated ₹37.1 million (approximately $442,025) over the past seven years, including during her time at SEBI.

This situation potentially contravenes SEBI’s 2008 policy, which prohibits officials from holding an office of profit or earning professional fees from other activities while serving at the regulatory body. Madhabi Puri Buch joined SEBI in 2017 and became Chairperson in March 2022. Although she transferred her shares in another consultancy, Agora Partners, to her husband upon her appointment, records indicate she retained shares in Agora Advisory Private Limited.

The timing of these allegations is particularly sensitive, coinciding with ongoing investigations by Hindenburg Research. The US-based short seller has accused Madhabi Puri Buch and her husband, Dhaval Buch, of holding investments in offshore funds allegedly linked to the Adani Group’s financial scandal. Madhabi Puri Buch has firmly denied these claims, asserting that her finances are transparent and that all relevant disclosures have been made to SEBI.

The controversy has prompted significant debate, with former SEBI board members and other officials expressing concerns about potential conflicts of interest. Subhash Chandra Garg, a former senior bureaucrat, has described Madhabi Puri Buch’s continued ownership of the consultancy as a “serious breach of conduct,” suggesting it undermines her position at SEBI.

Calls for Madhabi Puri Buch’s resignation have intensified, with political opposition and other critics demanding a thorough investigation. This situation highlights the delicate balance regulatory officials must maintain to uphold public trust and ensure their personal business activities do not conflict with their official duties.

In recent developments, Hindenburg Research released a report on August 10, 2024, alleging that Madhabi Puri Buch and her husband, Dhaval Buch, held stakes in offshore funds linked to the Adani Group. The report claims these funds were used in a scheme to inflate stock prices and obscure financial transactions. The allegations have placed Madhabi Puri Buch at the heart of this controversy, raising concerns about potential conflicts of interest given her regulatory role.

In response, Madhabi Puri Buch and her husband have strongly denied the allegations, calling them baseless and asserting that their finances are transparent. They emphasised that their investments were made while they were private citizens living abroad and were fully redeemed in 2018, before her appointment as SEBI Chairperson. They also stressed that their financial history has been consistently disclosed to SEBI.

The Financial Services Commission (FSC) of Mauritius, which has been implicated in the Hindenburg report, clarified that the fund mentioned, known as “IPE Plus,” is not registered in Mauritius and does not fall under its jurisdiction. The FSC rejected claims that Mauritius is a tax haven or a facilitator of shell companies, distancing itself from the controversy.

This incident underscores the challenges faced by regulatory bodies like SEBI in maintaining public trust amid complex financial issues. As the situation continues to develop, all eyes will be on SEBI and its Chairperson, Madhabi Puri Buch, to manage the fallout from these serious allegations.