Hindenburg Alleges India Market Regulator Chief Had Stake in Offshore Funds Used by Adani Group

In a bombshell report, U.S.-based short-seller Hindenburg Research has alleged that the chairperson of India’s market regulator, Madhabi Puri Buch, previously held investments in certain offshore funds that were also used by the Adani group.

Citing whistleblower documents, Hindenburg said that Buch and her husband held stakes in an offshore fund where a substantial amount of money was invested by associates of Vinod Adani, brother of Gautam Adani, chairman of the Adani group of companies.

Buch vehemently denied the report’s allegations, claiming they are baseless. She stated that she and her husband made investments in the fund in question in 2015, which was two years prior to her joining the Securities and Exchange Board of India (SEBI).

SEBI, India’s market regulator, urged investors to maintain composure and conduct due diligence before responding to such reports. According to the regulator, the allegations made against the Adani group by Hindenburg have been investigated, with 23 out of 24 inquiries completed in March 2024.

In January 2023, Hindenburg published a report that accused the Adani group of improper use of tax havens and stock manipulation, which resulted in a massive $150 billion sell-off in the conglomerate’s stocks. The stocks have since partially recovered.

Hindenburg’s 2023 report prompted an inquiry by SEBI, which is still ongoing. In May, six Adani Group companies were served notices by SEBI for alleged violations of Indian stock market regulations.

Separately, SEBI issued a “show cause” notice to Hindenburg Research, accusing the short-seller of violating India’s rules by establishing a short-bet using non-public information.

Hindenburg denounced these claims as “nonsense” in a note published on its website in July, which also made the regulator’s notice public.

In its latest report, Hindenburg seeks to establish a link between offshore funds that traded in Adani Group shares and personal investments made by Buch and her husband.

According to Hindenburg, the Bermuda-based Global Opportunities Fund, which was allegedly used by entities linked to the Adani group to trade in shares of group companies, had sub-funds.

Hindenburg alleges that Buch and her husband invested in one of these sub-funds in 2015, citing whistleblower documents.

In 2017, before Buch’s appointment as a whole-time member, the second-highest ranking position at SEBI, her husband requested to be the sole operator of the account, Hindenburg said, citing whistleblower documents.

Later in 2022, Buch was appointed as head of the regulatory body.

“We believe our findings raise questions that warrant further investigation. We welcome additional transparency,” Hindenburg stated.