4 key allegations levelled against SEBI chair Madhabi Puri Buch in latest Hindenburg report

Hindenburg Research has alleged that SEBI Chairperson Madhabi Puri Buch and her husband had a stake in certain offshore entities which were used in the Adani money siphoning scandal.

Hindenburg Research has levelled serious allegations against Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch in its latest scathing report. From having a stake in the obscure offshore entities used in the Adani money siphoning scandal to opaque consulting business transactions, here are the four key allegations against Buch from the US-based short seller.

1. Offshore fund connections: Hindenburg Research has alleged that SEBI Chairperson Madhabi Puri Buch and her husband, Dhaval Buch, held stakes in the same Bermuda and Mauritius funds used by Vinod Adani. They cited whistleblower documents and said that while Buch held the position of a whole-time member of SEBI, she emailed through her private account to redeem the units in the fund.

“We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani,” Hindenburg Research said.

Also Read | Sebi regulations around REITs benefited Blackstone where Madhabi Puri Buch’s husband Dhaval Buch was Senior Advisor, alleges Hindenburg

2. Financial Opacity: During her tenure as SEBI Chairperson from April 2017 to March 2022, Madhabi Puri Buch fully owned an offshore Singaporean consulting firm, Agora Partners. Shortly after her appointment, she transferred ownership to her husband.

This entity is exempt from disclosing financial statements so there is no clarity on the amount of revenue it derives from its consulting business and from whom, which Hindenburg said is "crucial information for those assessing the probity of the Chairperson’s external businesses interests".

"This is especially important given the direct email evidence presented earlier showing SEBI’s Chairperson, Madhabi Buch, having done business via private email through her husband’s name in offshore fund entities," the short seller said.

3. Conflict of Interest with Blackstone: During Buch’s tenure at SEBI, her husband was appointed as a senior advisor to Blackstone, a major investor in Real Estate Investment Trusts (REITs).

Hindenburg alleges that under Buch’s leadership, SEBI approved significant regulatory changes favouring REITs. The timing and nature of these changes, combined with Blackstone's interests, have led to suspicions of conflicts of interest.

During industry conferences, SEBI chair touted REITs as her “favourite products for the future” and urged investors to look “positively” upon the asset class, alleged Hindenburg, adding, "While making those statements, she omitted to mention that Blackstone, who her husband advises, stands to gain significantly from the asset class".

Also Read | Hindenburg Research alleges SEBI chair Madhabi Puri Buch had stake in obscure offshore entities used in Adani scandal

4. Opaque Consulting Business Transactions: The Hindenburg report revealed that Madhabi Buch currently holds a 99 percent stake in a consulting business called Agora Advisory, where her husband is a director. At the end of financial year 2022, the firm generated Rs 19.8 million (US $261,000) in revenue from consulting, per its annual report. This was 4.4 times Madhabi Buch’s previously disclosed salary as a whole-time member of SEBI.

"To date, Madhabi Buch remains a 99% owner of the business with her husband, Dhaval Buch as a director, per its shareholding list and corporate records," alleged Hindenburg.

"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.