India’s Stock market is valued at $5 Trillion, revealed a recent report by the investment bank J.P.Morgan. Any allegation over any of the stakeholders in this high value market, under normal circumstances, would have the media and investigating agencies hovering over the scandal, and government launching an official investigation.
However, the recent allegations by Hindenburg Research-a US Based short selling firm-against Securities Exchange Board of India(SEBI) Chairperson Madhabi Puri Buch saw no such reaction from the government. Meanwhile, the Public Accounts Committee (PAC) -constituted by the Parliament comprising of selected members of Parliament and currently headed by Congress’ Lok Sabha Member K.C.Venugopal has reportedly summoned the heads of SEBI and Telecom Regulatory Authority of India (TRAI) for a deposition on October 24, to review the functioning of top regulatory authorities.
Much has happened since August 10th- the day on which fresh allegations were levelled against Madhuri Buch that she had a stake in obscure offshore entities that were used to siphon money related to the Adani group. This article presents a picture of what has happened until now concerning the conflict of interest and other allegations against Madhabi Puri Buch and how she has responded to them. It is important to note here that Hindenburg Research- the primary mover of the allegations is a short selling firm which would benefit from the fall of the stock that they are shorting; and that Hindenburg had previously reported on alleged stock manipulation and related party transactions related to the Adani Group.
A brief background of the original Adani Report by Hindenburg becomes necessary here. Gautam Adani- the founder and chairman of the Adani group became one of the wealthiest people in the world and the wealth he amassed was largely through stock price appreciation in the group’s 7 key listed companies. The allegation was that that Vinod Adani- Gautam Adani’s brother – operates “vast labyrinth” of offshore shell entities with no operations, employees, independent addresses or meaningful online presence but were used to move billions of dollars into Adani’s publicly listed and private entities, often without required disclosure of the related party nature of the deals. It was further alleged that these offshore entities served as harbours to launder money through Adani’s private companies into listed companies’ balance sheets “in order to maintain the appearance of financial health and solvency.”
Primary Allegations by Hindenburg Research against Madhabi Buch-August 10, 2024
The following form the crux of first set of allegations by Hindenburg against Madhabi Buch-which the former claims to be based on Whistleblower Documents:
A. On having stake in an Obscure allegedly Adani related fund, as alleged by Hindeburg:
- A director who used to be with the Adani Group—Anil Ahuja— had set up an offshore entity -IPE Plus Fund through India Infoline in Mauritius which had only $38.43 million in assets under management at the end of December 2017. A Vinod Adani controlled firm called the Global Dynamic Opportunities Fund (GDOF)- which invested Adani Group’s siphoned funds in offshore entities to funnel back into stock markets, invested in the IPE Plus Fund too.
- Madhabi Puri Buch and her husband-Dhaval Buch first appear to have opened their account with IPE Plus Fund on June 5th, 2015, in Singapore.
- Before 2017 April-the month in which Madhabi Puri Buch was appointed as the Whole Time Member of SEBI, her husband Dhaval Buch wrote a letter to the fund administrator to make him the sole person authorised to operate the accounts.
- Despite this change, on February 25th, 2018- Madhabi Buch wrote to India Infoline, from her personal email, to engage in business under her husband’s name to redeem funds.
Based on these, Hindenburg questioned the transactions with a fund that is linked to Adani, while in position of power.
B. On IPO to Real Estate Investment Trusts backed by Blackstone, as alleged by Hindenburg
The following form the crux of second set of allegations that Hindenburg levelled against Madhabi Puri Buch on her open encouragements of Real Estate Investment Trusts (REITs)- a form of investment backed by the firm her husband works for. A REIT is a company that owns income-producing real estate, allowing investors to earn dividends without direct property management.
- Dhaval Buch-Madhabi Puri Buch’s husband worked as a Chief Procurement Officer at the consumer company Unilever, according to his LinkedIN and he has not worked in any fund, real estate or a capital markets firm.[1]
- Despite the lack of any experience in these areas, the global private Equity firm hired him as a senior advisor in July 2019.
- Blackstone is touted as the pioneer in listing REITs in the country along with its partners.
- Blackstone’s REIT Sponsorships: During Dhaval Buch’s tenure at Blackstone, the firm sponsored multiple REITs, including Mindspace REIT (India’s second REIT) in August 2020 and Nexus Select Trust (India’s fourth REIT) in May 2023. This period saw Blackstone becoming one of the largest investors and sponsors of REITs in India.
- 2022-Present – SEBI Regulations and Advocacy: Following Madhabi Buch’s appointment as SEBI Chairperson in March 2022, SEBI proposed and implemented several regulatory changes benefiting REITs, including nomination rights for unit holders like Blackstone. Meanwhile, Madhabi Buch publicly advocated for REITs as a promising investment, without disclosing her husband’s affiliation with Blackstone, which stood to gain significantly from these developments
On the basis of these points, Hindenburg questioned whether there is a conflict of interest, if not a capture of the institution and stated that their findings raise questions that merit further investigation.
C. On Madhabi Puri Buch owned company-Agora Advisory- reporting Revenue
The following form the crux of the third set of allegations made by Hindenburg against Madhabi Puri Buch on her having 99% stake in a consulting firm that earns revenue 4x of her salary.
- Agora Advisory Private Limited was set up in India on May 7th, 2013, with consultancy as main business activity. Madhabi Buch remains 99% owner with Dhaval Buch being a director in the company. At the end of 2022, the company had generated INR 19.8 million revenue from consulting per its annual report- 4 times Madhabi Buch’s salary as Whole Time Member of SEBI as per previous disclosures.
- Another firm called Agora Partners Pte Ltd was registered in Singapore to do business and management consultancy with Madhabi Puri Buch as 100% shareholder.
- Madhabi Buch remained a shareholder of the Singaporean Agora Partners even after becoming the Whole-Time member of SEBI.
- After she became the chairperson at SEBI on March 1st, 2022, the stake owned by Madhabi Puri Buch in the Singaporean Agora Partners was transferred to her husband on March 16th, 2022.
- Since this offshore Singaporean Agora Partners is exempt from disclosing financial statements, it is unclear whether it derives any revenue from consulting business or not-a crucial piece of information for those assessing the probity of Chairperson’s external business interests.
On the basis of these, Hindenburg questioned if these details were disclosed and called for more transparency.
Reactions to Hindenburg’s allegations-August 11, 2024.
On having funds in obscure allegedly Adani Related fund and redeeming it
The Buchs released a joint statement saying that that the investments in funds referred to by Hindenburg(the IPE Plus Fund) were made when both of them were private citizens living in Singapore and 2 years before she joined SEBI as a whole time member-something that the Hindenburg Report had already clearly stated. They stated that the reason to invest in IPE Plus Fund was that the Chief Investment Officer-Anil Ahuja is a friend of Dhaval Buch and after him leaving the fund, the investment was redeemed. The statement also said that Anil Ahuja had confirmed that there was no investment by the fund in any bond, equity or derivative of any Adani Group Company.
On IPO to Real Estate Investment Trusts backed by Blackstone
The statement released by the Buchs said that Dhaval Buch’s appointment as Senior Advisor to Blackstone was on account of his deep expertise in Supply Chain Management and that his appointment pre-dates Madhabi Buch’s appointment as SEBI Chairperson. The statement said that not only was Blackstone Group [and ICICI Group] added to Madhabi’s recusal list maintained with SEBI but also indicated that regulations of SEBI across all sectors are approved by the board and not by its Chairperson-regarding the allegation that tweaks were made to benefit and promote REITs.
On maintaining the companies-Agora Partners and Agora Advisory while being a SEBI Official
The Buchs stated that the two consulting companies set up by Madhabi Buch became dormant on her appointment with SEBI and that these companies and her shareholding in them, were explicitly part of her disclosures to SEBI. The Buchs said that after Dhaval Buch’s retirement in 2019, he started his own consultancy through these two companies allowing him to work with “prominent” clients in the Indian market. The statement said that that linking accruals in these companies to Madhabi Buch’s salary at SEBI is malicious. They added that the shareholding of the Singaporean entity was also disclosed when the shares were transferred to Dhaval Buch in 2022.
Hindenburg’s Counter-11th August 2024
Hindenburg Research, in a series of tweets, raised concerns about the Buchs’ response to their report, pointing out “new critical questions” and “important admissions.” One key issue was that Anil Ahuja, a former Adani director, was both a fund manager and a friend of the Buchs. Hindenburg claims this creates a conflict of interest, as SEBI is investigating Adani, a group linked to Ahuja. Meanwhile, SEBI chairperson’s husband is friends with Ahuja and the Chairperson herself had investments in his funds through her husband, even after joining SEBI. Hindenburg also alleges that this fund was used to siphon Adani’s private funds into the Indian stock market.
The counter of Hindenburg had revealed that the Indian Entity-which Madhabi Buch had stated has been dormant, is currently active and generating consulting revenue. Highlighting this, it questioned what other investments or businesses the SEBI Chairperson has engaged in through her husband’s name while serving in official capacity. It also asked whether the “prominent clients” her husband was engaged in included companies that SEBI is tasked with regulating.
SEBI’s Statement-11th August
On the same day, SEBI issued a statement saying that the relevant disclosures required in terms of holdings of securities and their transfers have been made by Madhabi Buch from time to time and that she has also recused herself in matters involving potential conflicts of interest.
Further scrutiny of Buch’s tenure took place from various angles — whether she recused from only Blackstone related matters or also from the matters related to companies in which Blackstone had a stake in; her role in disposing off an insider trading case against one Atul Goel and his company which had connections with Blackstone.
Meanwhile, news platform Scroll.in reported on 30 Aug, 2024 that Madhabi Buch did not recuse herself from the market regulator’s investigation into alleged stock manipulation by Adani Group according to a SEBI Board Member and that in fact, she oversaw SEBI’s Adani Probe. SEBI members must disclose financial interests to the board, specifically to the board’s secretary. SEBI’s 2008 conflict of interest code allows the board to scrutinize the chairperson’s disclosures, but it did not do so in Buch’s case, according to the board member.
Congress’s Allegations against Madhabi Puri Buch and subsequent Responses
A. Congress alleged on September 02, 2024 that Buch was drawing regular income-in the form of salary via ESOPs from ICICI bank while being a full time member of the board- a violation of Section 54 of SEBI Employees’ Service Regulations, 2001. Section 54 of the rules mandate that no employee shall accept, solicit, or seek outside employment or office, whether stipendiary or honorary, without previous sanction of the Chairman. The Congress further alleged that Buch dealt with complaints against ICICI and its affiliates and in one case, exempted the ICICI Group in a merger and acquisition matter. adjudicated complaints against ICICI and its affiliates, which it said amounted to a conflict of interest.
The ICICI bank issued a statement saying that it has not paid a salary or granted Employee Stock Ownership Plan benefits to Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India, after she retired from the company in October 2013.
Following this statement, Congress further questioned why the Rs. 5.03 Crore of retiral benefits were not uniform in terms of frequency and the sum amount. The party’s Media and Publicity Wing Head Pawan Khera asked whether the ESOP Exercise policy was changed from ‘exercisable within 3 months of voluntary termination’ as stated in the policy submitted to the US Securities Exchange Commission to ‘exercisable within 10 years’ from the data of vesting too accommodate an arrangement with the SEBI Chairperson.
B. Congress alleged on September 6, 2024 that Madhabi Buch received rent from a company called Carol Info Services Limited, a company that shares its promoter with Wockhardt Limited. Wockhardt Limited’s executives were imposed penalties of Rs. 13 Lakh of insider trading; In June 2023, SEBI had barred a former executive of the company from buying, selling or dealing in the securities of Wockhardt Limited for one year. Pawan Khera, in a Press Conference, asked if it was appropriate for Buch to rent out her private property to a company that has been under constant scrutiny for insider trading.
C. On September 10, 2024- the Congress alleged that Agora Advisory Private Limited — the Indian entity in which Buch owns 99% of stake in—earned Rs. 2.95 Crore from Mahindra and Mahindra, ICICI Bank, Dr. Reddy’s, Pidilite, Sembcorp and Visu Leasing and Finance. Out of the Rs. 2.95 Crore, 2.59 Crore was paid by Mahindra and Mahindra alone, added the party. In quid pro quo, SEBI has passed order favourable to Mahindra and Mahindra, according to the party.
Mahindra and Mahindra denied these allegations as false and misleading, and stated that they had hired Dhaval Buch in 2019 after his retirement from Unilever for his expertise in Supply Chain Management. It also denied the allegation of quid pro quo orders.
Buchs’ Response to Congress’ Allegations
Firstly, quoting the statements by companies which paid Agora Advisory, the joint statement by the Buchs said that Dhaval Buch being hired by the companies was solely due to his expertise as a Supply Chain Professional.
Second, on receiving money from Sembcorp and Visu Leasing and Finance- the statement said that the assignment concluded, and income was accrued in 2016-17; on receiving money from ICICI bank, the statement said that the money was interests on deposits and that ascribing motive to it is “unfortunate and defamatory.”
Third, on Rental Income, the statement said that Madhabi Buch has not dealt with any files related to Wockhardt and that there are procedures for dealing with cases and that no investigation files go to the Chairperson.
Fourth, on ICICI ESOPs, the statement said Madhabi was a retiring employee for whom the ESOP rules were different i.e., exercisable within 10 years, unlike for resigning employees. The statement also said that SEBI’s guidelines permit board members including Chairperson to hold and transact in ESOPs provided requisite disclosures are made, which Buch has been doing since 2017. The statement also said that this drawing of money via ESOPS would not amount to moonlighting.
Finally, the statement said that the income tax returns filed by them were obtained using fraudulent and illegal means—breaching their privacy— and that all these matters were fully disclosed, and taxes were paid.
Conclusion
The allegations against Madhabi Puri Buch, SEBI Chairperson, highlight several unanswered questions and underline the need for greater public accountability in India’s regulatory institutions. Despite the Buchs’ defense and SEBI’s statements, critical concerns remain unresolved. Key among these is the possible conflict of interest between Buch’s role as SEBI Chairperson and her past business associations, as well as her oversight of the Adani probe despite her alleged connections. This also raises a larger question of the possible conflicts of interest when an influential private sector professional becomes a regulatory body chief.
Hindenburg Research raised issues about her relationship with Anil Ahuja, her husband’s consultancy work with Blackstone, and her involvement in companies like Agora Advisory. Questions persist about the transparency of her financial disclosures and whether SEBI has sufficiently scrutinized potential conflicts of interest, and whether SEBI had full understanding of such conflict or not, especially due to a board member saying that disclosures were not made properly. The important part about disclosures is that the be made without delay and with best of intentions. If they are made after their utility diminishes, it would not serve the purpose.
Moreover, Buch’s continued engagement in companies like Agora Partners even after assuming her role at SEBI raises concerns about regulatory oversight. The controversy surrounding her non-recusal in Adani-related investigations and the alleged non-disclosure of financial interests calls for a closer look at SEBI’s internal mechanisms to safeguard institutional integrity.
At the heart of these allegations is a broader issue—the need for robust public accountability. SEBI, as the guardian of India’s $5 trillion stock market, must ensure that its leadership is beyond reproach. Regulatory institutions like SEBI wield significant power over the financial ecosystem, and any hint of conflict or misconduct at the highest level can erode public trust. This scandal underscores the urgent need for more stringent checks, transparent investigations, and mechanisms to hold senior officials accountable. Strengthening these processes is vital to safeguarding the credibility of India’s financial markets and regulatory institutions.
[1] Whole the Hindenburg Report mentions that he has not worked in any Capital Markets position etc, his LinkedIn profile does show that he has been with Agora Advisory since his retirement from Unilever.