The Congress party held a nationwide protest in several states on August 22, demanding the resignation of the SEBI chairperson and the formation of a joint parliamentary committee to investigate the Adani case. This started when on August 10 2024, Hindenburg Research published a report stating that Madhabi Puri Buch, Chairperson of SEBI, and her husband, Dhaval Buch, had stakes in the obscure offshore funds that had links to the Adani Group. This disclosure has brought SEBI, India’s financial regulator, under intense scrutiny, especially regarding potential conflicts of interest at the highest level of the regulatory body. Previously, in January 2023, Hindenburg Research, a US-based investment research firm, published a report accusing the involvement of the Adani Group in financial fraud and stock manipulation. This resulted in Adani Group’s share prices plunging and losing a market value of around $109 billion, though most of the stocks have now made a full recovery. Subsequently, the Supreme Court of India ordered SEBI to investigate the allegations made by Hindenburg Research in its report. On 3 January 2024, the Supreme Court noted that SEBI had completed the probe in most of the cases involving the Adani Group. However, some aspects of the investigation are still ongoing. In August 2024, the situation escalated as Hindenburg Research revealed another report alleging the involvement of SEBI’s regulator in the offshore funds linked to Adani, suggesting potential conflicts of interest. It was mentioned that Madhabi and Dhaval Buch had invested in a Bermuda-based fund managed by a close associate who was also a director of Adani Enterprises at that time. Hindenburg Research says that it was odd how the SEBI has reportedly not taken public action against the Adani Group despite concerns raised by various sources and media investigations. The report also claims that her husband took ownership of their investments to avoid scrutiny before her appointment as the market regulator. In response, Madhabi and Dhaval Buch denied the accusations and called them baseless. SEBI had also dismissed these allegations. Subsequently, the Adani Group refuted these claims, labelling them as “malicious and manipulative”. SEBI now faces additional scrutiny over the integrity of its leadership. These revelations raise important questions about the transparency and trustworthiness of the ongoing probe into the Adani Group. With such allegations, the credibility of the Indian financial system is questioned. This can result in low investor confidence, causing volatility in the financial markets. Moreover, it can also deter foreign investment if the market regulator is deemed unreliable. Overall, the market regulator's operations impact the nation’s economy. The Lokpal, headed by former Supreme Court Judge Justice AM Khanwilkar, had raised concerns about the credibility of the Hindenburg report with regard to complaints that call for an investigation into the SEBI chairperson’s involvement in the Adani group’s offshore funds. The Lokpal stated that the complainant had not attempted to check the validity of their claims, which was merely based on the Hindenburg report. Instead, the Lokpal had told the complainants to bring verified and valid evidence to vindicate their allegations.
Head Office of Securities and Exchange Board of India, Mumbai; Retrieved from Wikimedia Commons https://commons.wikimedia.org/wiki/File:SEBI_Bhavan.jpg
30 Sep 2024
Sri Haritha Bandreddi
