Hindenburg says SEBI chief Madhabi Puri Buch's response raises 'new critical questions'

"Buch’s response now publicly confirms her investment in an obscure Bermuda/Mauritius fund structure, alongside money allegedly siphoned by Vinod Adani. She also confirmed the fund was run by a childhood friend of her husband, who at the time was an Adani director," Hindenburg Research posted on X.

" Buch’s statement also claims that the two consulting companies she set up, including the Indian entity and the opaque Singaporean entity 'became immediately dormant on her appointment with SEBI' in 2017, with her husband taking over starting in 2019," it said.

"Per its latest shareholding list as of March 31st, 2024, Agora Advisory Limited (India), is still 99% owned by Madhabi Buch, not her husband" Hindenburg said. "This entity is currently active and generating consulting revenue," the US-based research body said.

"Furthermore, Buch remained a 100% shareholder of Agora Partners Singapore until March 16th, 2022, per Singaporean records, owning it during her entire time as a SEBI Whole Time Member. She only transferred her shares into her husband’s name 2 weeks after her appointment as SEBI Chairperson," it said.

Sebi on Sunday asked investors to remain calm and exercise due diligence before reacting to the report released by New York-headquartered Hindenburg Research.

In its latest report, Hindenburg alleged that Securities and Exchange Board of India (SEBI) chief Madhabi Puri Buch previously held investments in offshore funds which were also used by Adani Group.

SEBI said: "Investors may also like to take note of the disclaimer in the report that states that readers should assume that Hindenburg Research may have short positions in the securities covered in the report."

"The report inter alia claims that SEBI has not taken any action against the AdaniGroup. It questions SEBI’s action of issuing a show cause notice to Hindenburg Research on June 27, 2024," SEBI said.

"It further claims that SEBI has made changes to the SEBI (REIT) Regulations 2014, in order to benefit a diversified multinational financial conglomerate. These issues warrant an appropriate response," the market regulator further said.

SEBI said the allegations made by Hindenburg Research, against the Adani Group, have been duly investigated by it.

The market regulator further said: "Lastly, it is emphasized that SEBI has adequate internal mechanisms for addressing issues relating to conflict of interest, which include disclosure framework and provision for recusal.It is noted that relevant disclosures required in terms of holdings of securities and their transfers have been made by the Chairperson from time to time. Chairperson has also recused herself in matters involving potential conflicts of interest."

The Adani Group has dismissed the latest report from the US-based short-seller Hindenburg Research, calling it "recycled claims" that had previously been "proven baseless and dismissed by the Supreme Court." The ports-to-power conglomerate stated that the allegations were driven by personal gain, with no regard for facts or the law.

"For a discredited short-seller under the scanner for several violations of Indian securities laws, Hindenburg's allegations are no more than red herrings thrown by a desperate entity with total contempt for Indian laws," the group said in an exchange filing.

The statement referred to the show-cause notice issued by SEBI, the markets regulator, last month to Hindenburg and its sole beneficial owner, Nathan Anderson.

In July, the Securities and Exchange Board of India highlighted violations by Hindenburg and Anderson under the SEBI Act, SEBI's Prevention of Fraudulent and Unfair Trade Practices regulations, and SEBI's Code of Conduct for Research Analysts regulations.

SEBI chairman Madhabi Puri Buch and her husband Dhaval Buch, in a statement, called the report an attempted "character assassination" in response to the SEBI's July action against the short-seller.

" 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," they said in the statement.