A day after the US-based short-seller Hindenburg Research made a series of allegations against Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch, Sebi came out in Buch’s defence and said the regulator has adequate internal mechanisms to address issues related to conflict of interest, which include disclosure framework and provision for recusal. Relevant disclosures required in terms of holdings of securities and their transfers have been made by the Chairperson from time to time, SEBI said on Sunday. “Chairperson has also recused herself in matters involving potential conflicts of interest,” the regulator said, backing its Chairperson and advising investors to remain calm and exercise due diligence. The SEBI press statement came soon after Buch and her husband Dhaval Buch issued their second statement within a gap of 24 hours. In their second statement issued on Sunday, they said their investment in the offshore funds, mentioned by Hindenburg Research in its latest allegations, were made in 2015 when they both were ‘private citizens’ living in Singapore. The investment was made almost 2 years before she joined Sebi as a Whole-Time Member, it said. The SEBI statement backing her is significant since the market regulator’s board has Economic Affairs Secretary Ajay Seth, Secretary of the Ministry Corporate Affairs Manoj Govil and RBI Deputy Governor M Rajeshwar Rao as members, besides four Whole-Time Directors. Major decisions of the Sebi are decided in the board meetings. The market regulator also advised investors to remain “calm and exercise due diligence” before reacting to such reports. “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 Research may have short positions in the securities covered in the report,” Sebi said. On Saturday, the US-based Hindenburg Research, in a post on X (formerly Twitter) alleged that Madhabi Puri Buch and her husband had stakes in obscure offshore funds used in the Adani money siphoning scandal. The short-seller alleged that the couple invested in Global Dynamic Opportunities Fund (GDOF), in which Vinod Adani, brother of Gautam Adani, had invested. SEBI, over the years, has built a robust regulatory framework that not only aligns with best global practices but also ensures protection of investors, the regulator said. “The allegations made by Hindenburg Research, against the Adani Group, have been duly investigated by SEBI,” it said. “Supreme Court in its order of January 3, 2024 noted that SEBI had completed 22 out of 24 investigations into the Adani group. Subsequently, one more investigation was completed in March 2024, and one remaining investigation is close to completion,” the regulator said. During the ongoing investigation in this matter, more than 100 summons, around 1,100 letters and emails have been issued to seek information. “Further, more than 100 communications have been made seeking assistance from domestic/foreign regulators and external agencies. Also more than 300 documents containing around 12,000 pages have been examined,” it said. On the show-cause notice issued to Hindenburg, Sebi said it has been issued by following the due process of the law. “It is noted that Hindenburg Research has itself made the show cause notice issued to it available on its website. The show cause notice contains the reasons for its issuance. The proceedings in this matter are ongoing and the same is being dealt with in accordance with the established procedure and in compliance with the principles of natural justice,” it said. On the allegations that REIT regulations benefited a large “conglomerate”, Sebi said regulations are notified after approval of the SEBI Board. “As a measure of transparency, the agenda papers for Board meetings and outcomes of Board discussions are also published on SEBI website. Hence, claims that such regulations, changes to regulations or circulars issued related to REITs were to favour one large multinational financial conglomerate, are inappropriate,” it said. In their Sunday’s statement, Madhabi and her husband Dhaval Buch said, “The decision to invest in this fund was because the Chief Investment Officer, Anil Ahuja, is Dhaval’s childhood friend from school and IIT Delhi and, being an ex-employee of Citibank, J.P. Morgan and 3i Group plc, had many decades of a strong investing career. The fact that these were the drivers of the investment decision is borne out by the fact that when, in 2018, Ahuja, left his position as CIO of the fund, we redeemed the investment in that fund.” Ports-to-energy conglomerate, Adani group, in a statement said that the latest allegations by Hindenburg are malicious, mischievous and manipulative selections of publicly available information to arrive at predetermined 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 Honorable Supreme Court in March 2023,” Adani group said in a clarification. 360 One (earlier India Infoline) in a statement issued on Sunday said that throughout the fund's tenure, IPE-Plus Fund 1 made zero investments in any shares of the Adani group either directly or indirectly through any fund. At its peak, the fund's Assets Under Management (AUM) reached approximately USD 48 million, with over 90 percent of the fund consistently invested in bonds. GDOF invested in IPE-Plus Fund 1, a small offshore Mauritius Fund, managed by wealth management firm India Infoline (now 360 ONE WAM). The founder and chief investment officer (CIO) of IPE-Plus Fund was Anil Ahuja, who was also a director of Adani Enterprises, the flagship company of the Adani group, where he served three terms spanning nine years ending in June 2017. According to Hindenburg, Vinod Adani used the offshore fund to invest in Indian markets with funds allegedly siphoned from over invoicing of power equipment to the Adani Group.
