MC Exclusive | Search for the next Sebi chief may have started, say sources

Sources ruled out a premature termination of Madhabi Puri Buch as Sebi chief

The process of finding a possible successor to Madhabi Puri Buch, the chairperson of Securities Exchange Board of India (Sebi), is said to have been initiated by the government. According to highly placed people aware of the matter, the search process had started about a week to 10 days ago.

“Given where things stand, it needs to be seen if Buch is considered favourably for an extension in tenure,” said a person with knowledge of the development. He spoke on condition of anonymity.

“The formal process of inviting applications may commence in a few weeks,” said another person privy to the development. Buch assumed the role of Sebi chairperson on March 2, 2022, for a period of three years, which ends on February 28, 2025. Prior to this, she was a whole-time member at Sebi for five years from April 2017 to March 2022.

A few of the people cited also add that while the search process for Buch’s successor has been commissioned, one shouldn’t rule out the possibility of the incumbent chairperson getting an extension.

An email sent to the ministry of finance seeking comments on the matter remained unanswered till publishing the article. The article will be updated if a reply is received. A spokesperson for Sebi also did not respond to an email.

The people cited have ruled out a premature termination of Buch as Sebi chief. “She is likely to stay in office until her term comes to a close,” said a person cited above.

The tenure of a Sebi chief is usually for three years.  However, exceptions were made in case of UK Sinha and Ajay Tyagi who served as Chairmen for six and five years, respectively. Sinha served as Sebi chairman from February 18, 2011, to March 1, 2017, while his successor, Tyagi's tenure was from March 1, 2017, to February 28, 2022.

Allegations

Buch is facing a slew of allegations— initially from short-seller Hindenburg and later the Congress party— regarding her investments in offshore funds linked to the Adani Group, code of conduct violations. Further, a section of Sebi employees had accused her of creating a ‘toxic work environment’ though that matter has now been resolved.

On October 24, the Public Accounts Committee (PAC) of Parliament will review the functioning of top regulatory authorities. It has called heads of SEBI (including Buch) and TRAI for deposition.

Buch’s response

In a statement issued in a personal capacity on September 13, Madhabi Puri Buch and husband Dhaval Buch clarified that a property jointly owned by them was leased to an associate entity of Wockhardt under a 'normal course' and 'standard market practices', and the rental income was declared and tax paid on the income. Madhabi and Dhaval said that all necessary disclosures were made to the Securities and Exchange Board of India (SEBI) and the SEBI chair did not deal with any files or cases related to Wockhardt, when the listed entity was under the regulatory scanner.

With respect to the issue of employee stock options Buch has received from ICICI Bank and pension related matter, she clarified that she had a 10-year window to exercise her stock options and not 3 months as alleged by the Congress Party. “Madhabi has never dealt with any files related to the ICICI Group of Companies during her tenure,” she added in her press statement. They were responding to allegations made by Congress spokesperson Pawan Khera.

On the issue of REITs, Sebi issued a statement on August 11 stating that, “the claim that promoting REITs and SM REITs among various other asset classes by SEBI was only for benefitting one large multinational financial conglomerate, is inappropriate”.

It also clarified that SEBI had adequate internal mechanisms for addressing issues relating to conflict of interest, which include disclosure framework and provision for recusal. “It is  noted that relevant disclosures required in terms of holdings of securities and their transfers have been made by the Chairperson from time to time. Chairperson has also recused herself in matters involving potential conflicts of interest,” the market regulator said in its statement.

Prior to that on August 11, Buch and her husband clarified their investment in a offshore fund promoted by IIFL Wealth Management was made when they were Singapore-based private citizens and made two years before Madhabi joined Sebi as a whole-time member. This statement was in response to allegation by made by Hindenburg.