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Hindenburg hits out at Madhabi Buch, again: Short-seller says Sebi chief’s response raises ‘new critical questions’

Hindenburg Research on Sunday responded to Sebi chief Madhabi Puri Buch’s statement from the weekend that accused the short-seller of attempting a “character assassination” of the Buchs.

In a post on its X account, the short-seller said that the markets regulator boss’ response “raises numerous new critical questions,” and “includes several important admissions.”

Earlier, on Saturday night, Hindenburg published a report on its website claiming that the Buchs had stakes in Bermuda and Mauritius-based offshore funds used by Gautam Adani’s brother Vinod Adani “to amass and trade large positions in shares of the Adani Group”.

In response, Buch and her husband Dhaval Buch in a joint statement on Sunday said the investments were made in 2015, well before her appointment as a whole-time member of SEBI in 2017 and the subsequent elevation as chairperson in March 2022, and in capacity as “private citizens living in Singapore”. These funds became “dormant” on her appointment in SEBI.

“SEBI was tasked with investigating investment funds relating to the Adani matter, which would include funds Ms Buch WAS PERSONALLY INVESTED IN and funds by the same sponsor which were specifically highlighted in our original report. This is obviously a massive conflict of interest,” Hindenburg said.

According to the statement by Buch, investment in the two funds was made on advice of Dhaval’s childhood friend, Anil Ahuja – the person which Hindenburg on Saturday identified as the founder and Chief Investment Officer (CIO) of the Mauritius-based IPE Plus Fund and who the Adani group also in its the statement on Sunday said was a nominee of 3i Investment Fund in Adani Power (2007-2008) and served as a director of Adani Enterprises for three terms spanning nine years ending in June 2017.

“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. Per its latest shareholding list as of March 31, 2024, Agora Advisory Limited (India), is still 99 per cent owned by Madhabi Buch, not her husband. This entity is currently active and generating consulting revenue,” Hindenburg said.

Also, she remained a 100 per cent shareholder of Agora Partners Singapore until March 16, 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 two weeks after her appointment as SEBI chairperson,” it alleged.

Madhabi Puri Buch, husband Dhaval issue statement

Madhabi Puri Buch and her husband Dhaval Buch in a joint statement on Sunday strongly denied the “baseless allegations and insinuations made in the report”, saying the charges were “devoid of any truth”.

SEBI too defended its chairperson. In a two-page statement, it said Buch had made relevant disclosures from time to time and she “had also recused herself in matters involving potential conflicts of interest.”

Adani group too denied any commercial dealings with SEBI head, while wealth management entity 360ONE – formerly called as IIFL Wealth Management – separately said Buch and her husband Dhaval Buch’s investment in IPE-Plus Fund 1 was less than 1.5 per cent of the total inflows and that it did not make any investments in Adani Group shares.

Hindenburg said the Singaporean consulting entity she set up doesn’t publicly report its financials like revenue or profit and “so it’s impossible to see how much money this entity has earned during her time at SEBI.” “The Indian entity, still 99 per cent owned by the SEBI chairperson, has generated INR 23.985 million (U ~$312,000) in revenue (i.e. consulting) during the financial years (’22, ’23, and ’24), while she was serving as Chairperson, per its financial statements,” it said.

Hindenburg cited whistleblower documents to state that “Buch used her personal email to do business using her husband’s name while serving as a Whole Time Member of SEBI.” “In 2017, weeks ahead of her appointment as SEBI Whole Time Member, she ensured the accounts with ties to Adani ‘be registered solely in the name of Dhaval Buch’, her husband, as per whistleblower documents. Despite disclaiming control, a private email she sent a year into her SEBI term shows she redeemed stakes in the funds through her husband’s name, per the whistleblower documents. This raises the question: What other investments or business has the SEBI Chairperson engaged in through her husband’s name while serving in an official capacity?” it asked.

Buch, according to Hindenburg, said her husband used the consulting entities starting in 2019 to transact with unnamed “prominent clients in the Indian industry”. “Do these include clients SEBI is tasked with regulating?” it asked.

“Buch’s statement promised a ‘commitment to complete transparency’. Given this, will she publicly release the full list of consulting clients and details of the engagements, both through the offshore Singaporean consulting firm, the Indian consulting firm and any other entity she or her husband may have an interest in?” Hindenbug asked.

“Finally, will the SEBI Chairperson commit to a full, transparent and public investigation into these issues?” it further asked.