As Sebi chief Madhabi Buch digs heels in, key query: Did she disclose fund linked to Adani?

While SEBI, in its statement, said the Chairperson made relevant disclosures required in terms of holdings of securities and their transfers from time to time and also recused herself in matters involving potential conflicts of interest, Madhabi Puri Buch and her husband Dhaval Buch said, “SEBI has strong institutional mechanisms of disclosure and recusal norms as per the code of conduct applicable to its officers. Accordingly, all disclosures and recusals have been diligently followed, including disclosures of all securities held or subsequently transferred.”

Another former SEBI chief said though he did not have full knowledge about her investments and her disclosures to the SEBI board, available information in public domain suggested her time in SEBI since 2017 overlaps with the market regulator’s probe into 13 offshore entities which held stake in Adani Group companies. “It is not clear from the statement by Madhabi Puri Buch and her husband Dhaval Buch and that of SEBI if she recused herself from the Adani Group investigations,” he said.

A former bureaucrat who was a government nominee on the board of SEBI said there has been an instance in the past when the chairperson recused himself over what could be construed as conflict of interest. “C B Bhave recused himself when the issue of NSDL’s (of which he was the Managing Director) lack of oversight over a depository participant was being discussed by the SEBI board. In fact, there was a government order to that effect — his recusal from the decision-making process in the case,” he said.

Another bureaucrat, who was also on the board of SEBI in the past said, there was a former chief of SEBI who opened a demat account years after his term ended in the regulatory body. “He did not own shares of any company,” the bureaucrat said.

In her statement, Madhabi Puri Buch said upon her husband’s appointment as Senior Advisor to Blackstone Group, the company was immediately added to her recusal list maintained with SEBI. The statement does not clearly say that with respect to the global fund in which she made an investment in 2015, two years ahead of her appointment as SEBI’s a whole time member. The investment was redeemed in 2018, she said.

Former Chief Vigilance Commissioner Pradeep Kumar said, “The SEBI is an independent market regulatory body and the CVC has a limited role in its supervision, if at all. There is certainly no superintendence of the CVC over the SEBI, say, as it has over the CBI and the ED.”

But a former official said the existence of a Board with members from the Ministry of Finance and the RBI itself was an inbuilt oversight mechanism for the SEBI. Added to this was the fact that its judicial orders were scrutinized by benches of the Securities Appellate Tribunal.

Another former top SEBI official recalled how, several years ago, as the Investigating Officer of a major stock exchange scam, he was instructed by the Board to not route the inquiry files through the Chairman since some allegations had also been made against him. “In the present case too with allegations of a conflict of interest being thrown around, the Chairperson could and maybe should have recused herself from the Adani investigation,” he said