Has Hindenburg dropped the fourth allegation around REIT rules against Sebi chief?

The market regulator had released a statement following Hindenburg's allegations on policymaking on REITs, calling these allegations "inappropriate".

US-based Hindenburg Research appears to have dropped their fourth allegation against the capital market regulator Sebi's chairperson - of overseeing regulations on real-estate investment trusts (REITs) that benefitted Blackstone - going by their latest series of posts on social media handle X, in response to clarifications put out by Madhabi Puri Buch and Sebi.

Late evening on August 11, the research firm had raised follow up questions to Madhabi Puri Buch's response to their earlier report.

Hindenburg's follow up questions were on Buch's past holding in an offshore fund, the opacity of the business conducted through the Singapore-based consulting firm that she had set up, and the source of revenue of an India-based consulting firm she has ownership interest in.

However, there are no follow up query on their fourth allegation on market regulator proposing and implementing a raft of REIT legislation, "...of significant benefit to Blackstone as one of the largest sponsors in India", who also is the employer of Sebi chairperson's husband Dhaval Buch.

Hindenburg had gone on to say that Madhabi Buch was perhaps "the biggest champion of REITs in India" and, to further their argument, cited her speech from a summit hosted by News18.

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

The note issued in response to Hindenburg's allegations, signed off by Madhabi and Dhaval Buch said, "Dhaval's appointment, in 2019, as Senior Advisor to Blackstone Private Equity was on account of his deep expertise in Supply Chain management. Thus his appointment pre-dates Madhabi's appointment as SEBI Chairperson. This appointment has been in the public domain ever since. At no time has Dhaval been associated with the Real Estate side of Blackstone."

The note also mentioned, "On his appointment, the Blackstone Group was immediately added to Madhabi's recusal list maintained with SEBI".

The statement also addressed questions raised on policy making, adding, "Over the last two years, SEBI has issued more than 300 circulars (including "Ease of Doing Business" initiatives in line with the development mandate of SEBI) across the entire market ecosystem. All regulations of SEBI are approved by its Board (and not by its Chairperson) after extensive public consultation. Insinuations that a handful of these matters related to the REIT industry were favours to any specific party are malicious and motivated."

Sebi too released a statement on these allegations, terming Hindenburg's allegations as "inappropriate".

The regulator added that it ensures a thorough consultation process when introducing new regulations or amending existing ones. This process includes gathering feedback from industry stakeholders, investors, intermediaries, advisory committees, and the public. Proposals are only presented to the SEBI Board after this comprehensive consultation. Once approved, regulations are officially notified, and SEBI publishes the agenda papers and outcomes of Board meetings on its website for transparency.

"Hence, claims that such regulations, changes to regulations or circulars issued related to REITs were to favour one large multinational financial conglomerate, are inappropriate," Sebi's note added.