Hindenburg Research Report Highlights: SEBI advises investors to exercise caution on Hindenburg report

The live blog session has concluded. For more news, views and updates, stay tuned with Moneycontrol.com.

TMC MP Mahua Moitra said, "One simple point - Chairperson who has invested in (& interacted personally with) very same funds that need investigating, is leading organization entrusted with fiduciary responsibility of finding out other owners of the fund tells Supreme Court & its 6 member committee that it had "drawn a blank" & was a "chicken and egg situation" in its investigation into the "ownership" of 13 entities. What greater conflict of interest and mockery of justice is there?" she said on X.

Chairperson of SEBI is an opaque investor in Adani Group. Samdhi Cyril Shroff is on Corporate Governance Committee. No wonder all complaints to SEBI fall on deaf ears," she alleged on X.

"One simple point - Chairperson who has invested in (& interacted personally with) very same funds that need investigating, is leading organization entrusted with fiduciary responsibility of finding out other owners of the fund tells Supreme Court & its 6 member committee that it had drawn a blank & was a chicken and egg situation in its investigation into the ownership of 13 entities (sic).

"What greater conflict of interest and mockery of justice is there?" she said in another post on X.

"This situation is extraordinary. BJP is clearly on the back-foot in Parliament. We need both- a JPC as well as an SC monitored probe": TMC leader Derek O''Brien on Hindenburg report

"Investors should remain calm and exercise due diligence before reacting to such reports. Investors

may also like to take note of the disclaimer in the report that states that readers should assume that

Hindenburg (/topic/hindenburg) Research may have short positions in the securities covered in the

report," the SEBI said in a statement.

The integrity of SEBI, the securities regulator entrusted with safeguarding the wealth of small retail investors, has been gravely compromised by the allegations against its Chairperson.

Rahul Gandhi in post on X wrote," Honest investors across the country have pressing questions for the government:

- Why hasn’t SEBI Chairperson Madhabi Puri Buch resigned yet?

- If investors lose their hard-earned money, who will be held accountable—PM Modi, the SEBI Chairperson, or Gautam Adani?

- In light of the new and very serious allegations that have surfaced, will the Supreme Court look into this matter suo moto once again?

It is now abundantly clear why Prime Minister Modi is so afraid of a JPC probe and what it might reveal.

In its first comments following a new report by US-based short seller Hindenburg Research, capital markets regulator Sebi on Sunday said it has investigated all the allegations against the Adani group.

Chairperson Madhabi Buch made relevant disclosures from time to time and recused herself in matters involving potential conflicts of interest, the regulator said in a statement.

The regulator also said that it has duly investigated the allegations made by Hindenburg against Adani, and said that last of its 26 investigations is nearing completion now.

"Hindenburg has been served a show cause notice for a variety of violations in India. It is unfortunate that instead of replying to the Show Cause Notice, they have chosen to attack the credibility of the SEBI and attempt character assassination of the SEBI Chairperson," the statement said.

Union Communications Minister Jyotiraditya Scindia on Sunday accused the Congress of spreading anarchy and controversies over the Hindenburg Research's allegations against SEBI chairperson Madhabi Buch.

"Congress's work is only to spread anarchy and entangle the country in controversial matters," said Scindia while responding to reporters' query on the Hindenburg Research report.

The fund’s operations were conducted in full compliance with regulatory standards, and its investment strategy was governed solely by the fund manager. "Both Mrs. Madhabi Buch and Mr. Dhaval Buch, whose collective stake in the fund was under 1.5% of the total inflow, had no influence over the fund’s investment decisions," the company said in its press release

"Hindenburg has been served a show cause notice for a variety of violations in India. It is unfortunate that instead of replying to the Show Cause Notice, they have chosen to attack the credibility of the SEBI and attempt character assassination of the SEBI Chairperson," the statement said.

" From 2011 to March 2017, Madhabi lived and worked from Singapore, initially as an employee of a Private Equity firm and subsequently as a consultant. The investment in the fund referred to in the Hindenburg report was made in 2015 when they were both private citizens living in Singapore and almost 2 years before Madhabi joined SEBI, even as a Whole Time Member," reads a new press statement from Dhaval Buch and Madhabi Puri Buch

AMFI in press statement said,"Recent external comments on the Regulator Chairperson not only attempt to undermine the Chairperson Madhabi Buch’s contribution to the Indian capital market, but it also undermines our country’s economic progress and creating a trust deficit in the market ecosystem must be seen for what they truly are - attempts to create a sensation by connecting random events done in the past. Left unchecked, it can create unnecessary hurdles in the path of the world’s fastest-growing economy"

Hindenburg Research Report News LIVE: The protector turn out to be the destroyer, alleges Pawan Khera

The company denies any investment in Adani Group shares, either directly or indirectly through other funds, throughout the fund’s entire tenure.

In its press release on August 11, the asset management company says, "At its peak, IPE-Plus Fund 1 boasted Assets Under Management (AUM) of approximately $48 million. The fund was predominantly invested in bonds, with over 90% of its assets allocated to this category."

Hindenburg Research Report News LIVE: A JPC inquiry is imperative to investigate this, says Mallikarjun Kharge

Hindenburg Research Report News LIVE:Hinderburg report has revealed that SEBI is also involved

Hindenburg Report: “Hindenburg is trying to create controversies, so that India’s economy, businesses and share market collapse. They don’t want the country to progress. Once again, they have raised questions against the country’s internal agencies, even though the Supreme Court is satisfied with them. Government should take action against such attacks by external agencies like Hindenburg,” says banking expert Ashwini Rana.

• The latest report from Hindenburg Research has brought scrutiny to SEBI Chairperson Madhabi Puri Buch's promotion of Real Estate Investment Trusts (REITs) as a promising asset class. The report questions whether Buch’s advocacy is linked to her husband Dhaval Buch's role at Blackstone Inc., a major player in the REIT sector in India.
• According to the report, Dhaval Buch has been a senior advisor to Blackstone since 2019. Despite his previous experience as the Chief Procurement Officer at Unilever, Buch joined Blackstone without prior experience in real estate, REITs, or capital markets. Hindenburg highlights that Blackstone, a significant investor in REITs, has sponsored two of the four listed REITs in India: Embassy REIT and Mindspace REIT.
• The report alleges that during Dhaval Buch’s tenure at Blackstone, SEBI, under Madhabi Buch’s leadership, introduced several regulatory changes benefiting REITs. This includes changes in regulatory frameworks and consultation papers that, according to the report, specifically benefited private equity firms like Blackstone.
• Madhabi Buch has publicly praised REITs during industry conferences, referring to them as "Favorite Products For The Future" and encouraging a positive outlook on the asset class. The report suggests that Buch did not disclose her husband’s advisory role at Blackstone during these endorsements.
• Additionally, the report notes that Blackstone sold its stake in Embassy REIT for approximately ₹71 billion ($853 million) in December 2023, marking one of the largest block trades in India for that year.
• In response, Blackstone has clarified that Dhaval Buch's role at the firm does not involve real estate or REITs. The company emphasized that Buch’s appointment predates Madhabi Puri Buch’s appointment as SEBI Chairperson and that his role focuses solely on procurement and supply chain-related matters, without involvement in investment-related activities.
• The discussion continues as the implications of these connections are examined, with stakeholders and regulators closely monitoring the developments.

"The recent revelation by Hindenburg has thoroughly exposed the BJP govt, how this govt is backing the corporate houses, particularly Adani, to loot the wealth of the nation and PM Modi is defining the corporate houses as wealth creators, they are wealth looters. SEBI is considered to be a market regulator but SEBI chief has conflict of interest, she and her husband have stakes in market and they allow the market situation to be used and influenced by corporate houses, to further loot. It is a very serious moral question whether she will continue to be the chief of SEBI? Our stand is that she should step down. What is the response of the govt? FM Nirmala Sitharaman should speak. There is a need of high-level investigation. The PM should tell how they are addressing this situation," says CPI leader D Raja on Hindenburg row.

On Hindenburg report with allegations on SEBI Chief and her husband, BJP leader and former Union Minister Rajeev Chandrasekhar says, "...These are a set of innuendos and guesswork that are being tied together with a few grains of truth...There is a certain plan behind this...India's financial system today is the strongest in the world...Indian banks are strong. Indian financial sector has been rebuilt over the last ten years by PM Modi...There seems to be a pattern where the Congress over the last ten years has adopted a strategy of politics of lies and is now seeking foreign help to destabilize our financial system and to create chaos in the country by attacking the independent regulator SEBI and by casting aspersions on the chairman of SEBI...Nothing in the report is credible..."

See how our system is rigged, how our economic system has been captured where there is this level of corruption and efforts are made to hide it. You file complaints with SEBI for any misdeed whereas SEBI itself is not clean. Today, people will start making statements on our national flag... they should acknowledge the flaws instead of trying to hide them," says RJD MP Manoj Jha on the Hindenburg report.

The latest allegations by Hindenburg are malicious, mischievous and manipulative

selections of publicly available information to arrive at pre-determined conclusions

for personal profiteering with wanton disregard for facts and the law. We

completely reject these allegations against the Adani Group which are a recycling

of discredited claims that have been thoroughly investigated, proven to be baseless

and already dismissed by the Hon'ble Supreme Court in March 2023.

It is reiterated that our overseas holding structure is fully transparent, with all

relevant details disclosed regularly in numerous public documents. Furthermore,

Anil Ahuja was a nominee director of 3i investment fund in Adani Power (2007-

2008) and, later, a director of Adani Enterprises until 2017.

The Adani Group has absolutely no commercial relationship with the individuals or

matters mentioned in this calculated deliberate effort to malign our standing. We

remain steadfastly committed to transparency and compliance with all legal and

regulatory requirements.

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.

— Spokesperson, Adani Group

Hindenburg Research has raised concerns about a potential conflict of interest involving SEBI Chairperson Madhabi Buch. The firm claims that since Buch took on the role in March 2022, she has overseen major regulatory changes that significantly benefited the Real Estate Investment Trust (REIT) industry, particularly favoring Blackstone. This is notable given Blackstone's growing presence in the Indian REIT market. In December 2023, Blackstone completed a major exit from the Embassy REIT, selling its stake for around INR 71 billion (USD 853 million), which was the largest block trade of the year in India. This transaction underscored Blackstone’s substantial influence in India’s real estate sector during Dhaval Buch’s time as Senior Advisor.

Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch has been implicated in a new report by Hindenburg Research, which alleges connections to the Adani Group’s offshore operations. Released on Saturday, the report claims that Madhabi Buch and her husband, Dhaval Buch, had stakes in funds based in Mauritius and Bermuda. According to the report, these offshore funds were part of the Adani Group’s complex financial system used for siphoning money. Read more here.

On Hindenburg report with allegations on SEBI Chief and her husband, Congress MP Shashi Tharoor says, "These are serious matters. I am not aware of the details...Any such allegations must be answered satisfactorily or investigated. Can't leave these things hanging up there and casting a cloud on the integrity of our system. It is important that either a satisfactory explanation is given by the people accused or there should be an investigation."

Dhaval Buch is currently a senior advisor at Blackstone and Alvarez & Marsal, according to his LinkedIn profile. He also serves as a non-executive director on the Board of Gildan. Previously, he was the CEO of Bristlecone and Interim President of Group Technology at the Mahindra Group. His LinkedIn profile notes a three-decade career with Unilever, where his last role was Chief Procurement Officer, following his position managing Unilever's Supply Chain for Asia and Africa, both based in Singapore.

Criminal lawyer Jai Anant Dehadrai has criticized Hindenburg Research's latest report on social media, which claims that SEBI Chairperson Madhabi Buch and her husband were involved with offshore funds linked to foreign money flowing into the Adani Group. Hindenburg's report, based on whistleblower documents, alleges that Buch and her husband held stakes in these "obscure offshore funds," which were purportedly used to channel funds into the Adani Group. Read more here.

The Hindenburg report has disclosed that Madhabi Buch currently owns a 99 percent stake in a consulting firm named Agora Advisory, where her husband, Dhaval Buch, serves as a director. According to the firm's annual report, Agora Advisory generated Rs 19.8 million (US $261,000) in revenue for the financial year 2022, which is 4.4 times higher than Madhabi Buch’s previously disclosed salary as a whole-time member of SEBI. Hindenburg alleges that, as per shareholding lists and corporate records, Madhabi Buch continues to hold a 99 percent ownership in the business, with Dhaval Buch listed as a director.

During Madhabi Puri Buch's tenure at SEBI, her husband was appointed as a senior advisor to Blackstone, a major player in Real Estate Investment Trusts (REITs). Hindenburg Research alleges that under Buch’s leadership, SEBI enacted regulatory changes that favor REITs. The timing and nature of these changes, coupled with Blackstone's interests, have raised concerns about potential conflicts of interest. Hindenburg claims that during industry conferences, Buch praised REITs as her "favourite products for the future" and encouraged investors to view the asset class positively, without disclosing her husband’s connection to Blackstone, which stands to benefit significantly from these developments.

During her tenure as SEBI Chairperson from April 2017 to March 2022, Madhabi Puri Buch fully owned Agora Partners, an offshore consulting firm based in Singapore. Shortly after her appointment, she transferred ownership of the firm to her husband. Since Agora Partners is exempt from disclosing financial statements, there is no transparency regarding its revenue sources, which Hindenburg Research argues is crucial for evaluating Buch's business interests. The short seller highlighted concerns about the lack of clarity, particularly given evidence that Buch conducted business through her private email using her husband's name in connection with offshore fund entities.

Shiv Sena (UBT) leader Priyanka Chaturvedi commented on Saturday that the reason behind SEBI's failure to respond to her requests for details on Adani group companies has become apparent.

"Now we know why our letters went unanswered and unacknowledged," she said in her reaction.

Hindenburg Research has accused SEBI Chairperson Madhabi Puri Buch and her husband, Dhaval Buch, of having stakes in Bermuda and Mauritius funds linked to Vinod Adani. The firm referenced whistleblower documents, alleging that while Buch was serving as a whole-time member of SEBI, she used her private email to redeem units in these funds.

Hindenburg Research suggested that SEBI's perceived reluctance to act against offshore shareholders connected to the Adani Group might be influenced by Buch's involvement with the same funds used by Vinod Adani, brother of Gautam Adani.

"In the context of allegations made in the Hindenburg Report dated August 10,2024 against us, we would like to state that we strongly deny the baseless allegations and insinuations made in the report. The same are devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years. We have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them. Further, in the interest of complete transparency, we would be issuing a detailed statement in due course. 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," reads a press statement by SEBI chairperson Madhabi Puri Buch and her husband Dhaval Buch.